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- South Korea’s Financial Services Commission warned on Oct. 16 that illegal domestic business by offshore perpetual-contract platforms could lead to investigator referrals.
- Authorities plan closer monitoring of products linked to Korean stocks and indexes, including targeting the solicitation of Korean residents through referral codes.
- The advisory names no platforms and announces no completed referrals or new blanket ban.
South Korea’s Financial Services Commission (FSC) warned on Oct. 16 that illegal domestic business by offshore perpetual-contract platforms could lead to referrals to investigators. Authorities plan closer monitoring of products linked to Korean stocks and indexes and their effects on domestic markets.
FSC Flags Referral Codes and Local Solicitation
The advisory identifies solicitation of Korean residents as an enforcement concern, including using referral codes to attract new users and receiving fees for recruiting them.
Authorities also plan to seek cooperation from major offshore platforms already supporting Korea-linked perpetual contracts to prevent violations of domestic law. The FSC described its planned response if illegal domestic business is found:
“We plan to respond firmly, including by filing complaints with investigative authorities.”
The advisory names no platforms and announces no completed referrals or new blanket ban.
FSC Warns High Leverage Can Wipe Out Investments
The regulator said products currently traded offshore offer leverage ranging from 10 to 200 times the underlying asset’s price movement. In its example, a position linked to a Korean stock index at 150 times leverage could be forcibly liquidated after an adverse move of roughly 0.66%.
The FSC also warned that investors may struggle to obtain redress under Korean law if an offshore platform fails, suspends trading or suffers operational problems. Authorities may be unable to verify whether customer assets are properly protected and held.
Domestic derivatives markets have safeguards such as minimum deposits, prior education and simulated trading requirements for ordinary retail investors. The regulator said comparable protections may not apply to offshore crypto platforms.
FSC Plans Further Review of Domestic Products
Perpetual contracts provide exposure to an asset’s price without a scheduled final expiry. They allow traders to maintain positions without repeatedly replacing expiring contracts, a feature that helped them develop in crypto markets.
An Oct. 5 paper from the Korea Capital Market Institute described their expansion into individual stocks and stock-index funds.
It called for reviewing how Korea’s existing derivatives framework could cover contracts without fixed expiry and whether legislative changes were needed.
The FSC said any future introduction of similar products domestically and the rules governing them would be considered in light of market effects, investor protection and international discussions. Its advisory does not specify which platforms will receive cooperation requests or when those requests will be sent.
