South Korea’s new regulations to protect users’ assets on crypto exchanges went into effect on July 19.
The highly anticipated regulations from South Korea’s financial security regulator are designed to safeguard users buying and storing crypto assets with virtual asset service providers (VASPs). These new rules, known as the “Virtual Asset User Protection Act,” took effect on July 19, as announced by the Financial Services Commission (FSC) on July 17.
Under the new regulations, VASPs must implement several measures to protect users’ crypto assets. These measures include purchasing insurance against hacking and malicious attacks, segregating customer crypto assets from the exchange’s own assets, and ensuring customer deposits are securely held in banks.
Additionally, VASPs must maintain rigorous due diligence to prevent money laundering on their platforms and report any suspicious transactions to the regulator. The FSC stated, “VASPs should maintain a surveillance system for suspicious transactions at all times and immediately report suspicious trading activities to the Financial Supervisory Service (FSS).”
The FSC further warned that those found engaging in unfair trading activities, after investigations by financial and investigative authorities, could face criminal penalties or fines.
Concerns Among South Korean Crypto Exchanges
Crypto exchanges in South Korea have expressed concerns that the new rules could lead to the simultaneous delisting of many tokens. On July 3, it was reported that a group of 20 South Korean crypto exchanges will review a total of 1,333 cryptocurrencies over the next six months as part of the new crypto user protection laws. However, the Digital Asset Exchange Alliance (DAXA) indicated that the possibility of a mass delisting all at once is unlikely.
Summary Review: The implementation of South Korea’s “Virtual Asset User Protection Act” marks a significant step towards safeguarding users’ crypto assets. These stringent regulations aim to enhance security and transparency within the crypto industry, requiring VASPs to adopt comprehensive measures against hacking, ensure asset segregation, and conduct rigorous anti-money laundering practices. While these new rules have raised concerns among South Korean crypto exchanges about potential mass delistings, the Digital Asset Exchange Alliance (DAXA) has suggested that such a scenario is unlikely. As these regulations take effect, the global crypto community will be watching closely to see how they influence the market and user protection.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
