On July 19, the South Korean watchdog implemented new regulations to safeguard user assets on cryptocurrency exchanges
The much-discussed new regulations from South Korea’s financial security regulator, intended to safeguard users who purchase and store crypto assets with virtual asset service providers (VASPs), were implemented on July 19.
According to a July 17 statement from South Korea’s Financial Services Commission (FSC), the “Virtual Asset User Protection Act” mandates that VASPs implement numerous measures to safeguard users’ crypto assets.
These include the requirement to maintain the customer’s crypto assets separate from the exchange’s assets, the requirement to keep customer deposits “safely kept in banks,” and the acquisition of insurance against hacking and malicious attacks against the user’s crypto assets.
In addition, VASPs must report any suspicious transactions to the regulator and maintain a certain level of due diligence to prevent money laundering on their platforms.
“VASPs are required to operate a surveillance system for suspicious transactions at all times and promptly notify the Financial Supervisory Service (FSS) of any suspicious trading activities,” it stated.
“Those who are discovered to have engaged in unfair trading activities may be subject to criminal punishment or penalty surcharge after investigations by the financial and investigative authorities,” it further stated.
Concerns among South Korean cryptocurrency exchanges
South Korean crypto exchanges have recently expressed apprehension that the regulations would necessitate the simultaneous delisting a significant number of tokens.
According to the Digital Asset Exchange Alliance (DAXA), the likelihood of a mass delisting occurring simultaneously is low, as a group of 20 South Korean crypto exchanges will evaluate a total of 1,333 cryptocurrencies over the next six months as part of the new crypto user protection laws, as reported by Cointelegraph on July 3.
In the interim, the People’s Power Party, the ruling party of South Korea, officially suggested that implementing the country’s tax on crypto trading profits be postponed.
The party submitted the proposition on July 12 and observed that the current sentiment toward crypto assets was deteriorating. The description indicated that imposing taxes on virtual assets at an accelerated pace is “not recommended at this time.”
