South Korea Crypto Exchanges Under Probe For Fee Hikes Post New Regulation

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As a seasoned crypto investor with a deep understanding of the volatile nature of this market and the unique challenges it presents, I find the recent developments in South Korea particularly noteworthy. The summoning of major South Korean crypto exchanges by the Financial Supervisory Service (FSS) has set off alarm bells for me and many others in the community.

Five prominent cryptocurrency exchanges in South Korea have been called in by the Financial Supervisory Service (FSS) following the recent implementation of new crypto regulations. This action indicates increased examination of industry norms by the FSS. The summonses were issued after significant fee increases by market leaders, fueling worries about a level playing field and user safeguards.

South Korea Crypto Exchanges Under Scrutiny

The Financial Supervisory Service (FSS) of South Korea has called a mandatory gathering with the five leading cryptocurrency exchanges – Upbit, Bithumb, Coinone, Korbit, and Gopax – on July 24, 2024. This assembly was convened in response to growing controversy concerning the usage fees for deposits within the crypto market. With heightened competition among these exchanges, they have been raising their deposit fees since the enactment of the Virtual Asset User Protection Act.

As an analyst, I’d rephrase it as follows: The FSS intervention was instigated by Bithumb’s initial announcement on July 23 to elevate their usage fee from 2.2% to 4.0% annually. However, they subsequently reversed this decision. This action followed a string of fee hikes by other exchanges since the Act’s enforcement on July 19-20. Upbit was the first to implement an increase, raising their rate from 1.3% to 2.1%. Korbit followed suit with an increase to 2.5%.

According to financial regulators, Bithumb’s imposed 4% fee was considered questionable. They referenced Article 5 of the Virtual Asset Industry Supervision Regulations which stipulates that deposit fees must be “reasonably determined” taking into account operating revenues and related expenses.

At the meeting, the Financial Services Commission (FSC) sought to reassess the formulas used to calculate deposit fees for cryptocurrencies and resolve disputes among crypto exchanges concerning fair pricing. South Korean crypto platforms were instructed to share thorough details about their deposit management procedures and fee determination processes.

Broader Regulatory Landscape and Future Implications

As a financial analyst, I’d rephrase it as follows: The debate over deposit fees in South Korea’s crypto market is just one piece of a broader regulatory trend. Previously, the Financial Services Commission (FSS) announced intentions to establish a system for tracking abnormal cryptocurrency transactions, necessitating exchanges to share comprehensive data. This move coincides with the recently enacted Virtual Asset User Protection Act.

At the same time, the Digital Asset Exchange Alliance (DAXA) is conducting an extensive examination of approximately 1,300 digital assets in order to ensure they adhere to new regulations. This process isn’t intended as a widespread removal of coins from exchanges, but it could present difficulties for altcoins that fail to measure up to regulatory requirements.

The FSS regulations provide specific criteria for detecting questionable cryptocurrency trades. These include significant volume and price discrepancies, large deals, and sluggish execution. Disregard of these rules may lead to substantial consequences, marking a tougher regulatory landscape in South Korea’s crypto market.

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2024-07-24 13:50