"FSC Expands Rules on Overseas Exchange Affiliate Links: Are Virtual Asset Operators at Risk?"

# South Korea’s Financial Authority Tightens Regulation on Affiliate Marketing for Crypto Exchanges The South Korean Financial Services Commission (FSC) has issued a regulatory interpretation suggesting that affiliate marketing activities, such as introducing foreign digital asset exchanges to domestic users for transaction fees, could be classified as operating a virtual asset business. This could mean YouTubers, bloggers, and community operators who share affiliate links may face registration obligations and potential penalties. ## Revenue and Repetition as Crucial Business Classification Criteria On October 9, the FSC announced via the Financial Regulation and Legal Interpretation Portal that promoting foreign digital asset exchanges to the public could be seen as business activity under the Virtual Asset User Protection Act, depending on the scale and nature of these activities. The law broadly defines virtual asset businesses to include not only the buying and selling of digital assets but also intermediary actions like brokerage, arrangement, and facilitation. The FSC’s interpretation indicates that marketing efforts aimed at indirectly attracting users or earning fees from such exchanges could be subject to regulatory scrutiny if they meet specific conditions. ## Affiliate Marketers, Including YouTubers and Bloggers, May Be Impacted This isn't the first time the FSC has clarified its stance on such activities. In its “Anti-Money Laundering Regulatory Cases Handbook 2.0” from February 2022, the FSC addressed scenarios where securities apps linked users to mobile web pages of partner digital asset exchanges without additional customer verification, suggesting such referrals could be seen as intermediary activities. The recent interpretation extends these principles to activities involving foreign exchanges. Affiliate marketing programs that promote these platforms to South Korean users could therefore qualify as virtual asset business activities. Consequently, individuals like YouTubers, bloggers, or Key Opinion Leaders (KOLs) who consistently share affiliate links for profit may be legally categorized as engaging in commercial operations, requiring them to register under the Virtual Asset User Protection Act. Suh-Ho Jung, CEO and attorney at Renaissance, explained, "Affiliate marketers, such as YouTubers or influencers, could indeed fall under regulatory oversight, based on the financial authorities’ interpretation. However, this would only apply if their activities are continuous and repetitive rather than one-off promotions.” ## Blurred Lines Between Promotion and Intermediary Activities The FSC emphasizes that not all activities promoting digital assets will automatically lead to business classification. The application of such regulations depends heavily on the service's specific nature and context. For instance, the distinction between one-time promotional posts and recurring marketing campaigns, as well as the revenue structure resulting from such ventures, could significantly impact regulatory compliance decisions. This lack of clarity in the early implementation of the Virtual Asset User Protection Act has led to questions about practical application. The FSC acknowledged these challenges, stating that each case would require a judgment based on its individual characteristics and that not all affiliated actions would necessarily classify an individual as a virtual asset business operator. ## Navigating the Gray Area: Calls for Caution Legal and regulatory experts advise businesses and individuals in the crypto space to operate conservatively given the prevailing uncertainty. “As case precedents accumulate following the implementation of the Virtual Asset User Protection Act, regulatory standards will gradually become clearer,” noted Attorney Jung. “For the time being, participants should adopt a cautious approach due to the persistent legal ambiguities.” Puren Hong, CEO and attorney at Decent, highlighted the broader context of financial regulation. “The debate around intermediary versus promotional activities has long been a point of contention in traditional financial markets,” she pointed out. “While simple advertising campaigns have typically been afforded greater flexibility, activities resembling financial product brokerage have been subject to stricter regulatory control.” Hong further remarked that in the digital asset sector, the boundary between promotion and intermediary activities remains especially ambiguous. She called for ongoing regulatory interpretations by the FSC and clearer guidelines to provide the industry with much-needed certainty. ## Industry Implications As South Korea sets new standards for digital asset regulation, the FSC’s evolving guidance underscores the critical need for industry participants to reassess their operational and marketing strategies. Those engaging in affiliate marketing, content creation, or community-building activities tied to the promotion of crypto exchanges must proceed with caution, particularly if their efforts involve repetitive actions and revenue generation. The regulatory landscape continues to evolve, placing compliance and legal prudence at the forefront of the sector.