As an analyst with a background in finance and experience following the cryptocurrency market, I believe that South Korea’s new crypto act is a significant step towards regulating and protecting users in the country. The comprehensive review of listed assets by exchanges is a necessary measure to ensure that only reliable and compliant tokens are traded on their platforms.
Starting July 19, I, as an analyst, will witness South Korea’s historic implementation of its first crypto act focusing on user protection. Consequently, the financial authorities in South Korea have communicated with approximately 30 registered exchanges, requiring them to scrutinize the over 600 cryptocurrencies listed on their platforms. Compliance with this new law is crucial; non-compliant companies may face severe criminal consequences.
Crypto Exchanges Required To Review Assets’ Listing
On Sundays, The Korea Times announced that regulatory-registered cryptocurrency exchanges in South Korea are required to conduct thorough assessments of the status of their listed digital assets. At present, approximately 29 exchanges in South Korea facilitate trading for over 500 distinct cryptocurrencies.
During the second half of 2023, more than 600 cryptocurrencies were traded on South Korean crypto exchanges according to data from the Korean Financial Intelligence Unit (FIU). This represents a 3.5% decrease compared to the first half of the same year. The report was released under the supervision of the Financial Services Commission (FSC).
The Financial Supervisory Service (FSS) announced that every crypto exchange under its regulation is required to evaluate whether the cryptocurrencies they offer comply with the FSS’s standards.
Financial regulatory officials require exchanges such as Upbit, Bithumb, Coinone, and Korbit to assess their listed cryptocurrencies every six months for regular evaluations. Additionally, these platforms need to perform “upkeep checks” every three months. Throughout this procedure, the exchanges must determine whether they will continue facilitating trades for the scrutinized digital assets.
Under the latest legislation, it is mandatory for cryptocurrency exchanges to establish an assessment unit in their organizations. The role of this unit is to scrutinize the credibility of the entities behind the issuance of tokens.
Further, it’s essential for them to evaluate if the issuers adhere to safeguards for user protection, employ adequate technology, ensure security, and comply with regulations. Any tokens that fall short of these prerequisites will be designated as “cautionary” assets, potentially leading to their removal from the platform.
As a crypto investor, I would interpret this report’s finding as follows: For cryptocurrencies such as Bitcoin where there isn’t a clearly defined issuer, additional selection factors will be employed.
South Korean Authorities Gearing Up For New Legislation
In February, I learned that South Korean financial authorities planned to enforce their Virtual Asset User Protection Act on July 19. This marks the first crypto-related legislation in Korea, with the primary goal of safeguarding users’ assets and preventing unfair trading practices within the industry. Furthermore, the new law empowers financial regulators to oversee and supervise virtual asset transactions and businesses, ensuring a more regulated market.
According to Bitcoinist’s report, it is crucial for crypto businesses to prioritize their customers’ security and protect their investments. Failure to comply with the new regulations may lead to penalties for business owners, including fines and even imprisonment for up to a year. Virtual asset firms face potential fines amounting to three to five times their ill-gotten gains, while criminal charges carry the risk of incarceration.
According to The Korea Times article, financial regulators are planning to restructure internally to formulate policies regarding the cryptocurrency sector. The Financial Services Commission (FSS) intends to oversee and probe unjust practices in virtual asset trading through its newly established bureaus.
At the close of this month, the Financial Services Commission is intending to set up a specialized bureau. This new entity will be solely responsible for managing the regulatory framework concerning virtual assets.
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2024-06-18 07:12