Regulation
South Korea faces new cryptocurrency rules: What to expect
South Korea will see its one-year grace period for the Virtual Asset User Protection Act end this month. With the end of that grace period, two major developments are expected to change cryptocurrency regulation as citizens of the country know it.
As the country’s regulatory climate tightens this month, the cryptocurrency market’s recovery could slow due to reduced trading volumes.
Cryptocurrency Regulation Overhaul: New Laws In South Korea
South Korean lawmakers passed the Virtual Asset User Protection Act in July 2023, granting a one-year grace period before its implementation. Local media reported that the legislation would be divided into two parts, with the first expected on July 19. The second part is still being drafted.
Under this legislation, the Financial Services Commission (FSC), South Korea’s regulator, and the Bank of Korea would jointly supervise the country’s cryptocurrency operators and asset custodians. According to a official statement of the FSC, the aim is to prevent illicit market activities.
Cryptocurrency exchanges will also have to secure at least 80% of deposits in cold storage and enroll in insurance programs. These measures will ensure the safety of users’ funds, with the ability to compensate in the event of failure. security violations.
Learn more: Cryptocurrency Regulation: What Are the Pros and Cons?
As the one-year grace period expires this month, South Korea is coping with the expiration of that grace period with new technology. In an announcement Thursday, South Korea’s Financial Supervisory Service (FSS) announced the launch of a 24-hour monitoring system for local exchanges on July 19. The deployment will take place as soon as the law on the protection of users of virtual assets comes into force.
The Financial Supervisory Service (FSS) has developed a standardized reporting format based on the Korea Stock Exchange. This system analyzes data reported by local exchanges, identifies and removes irregularities in transaction reports.
“We compared KRX’s (Korea Exchange) criteria for extracting abnormal transactions and prepared models and metric indicators through multiple simulations, which we hope will meticulously filter out abnormal transactions,” a statement read. excerpt from a press release shared Thursday.
The FSS relies in particular on stock exchanges, which monitor suspicious transactions and detect illegalities. There is also a direct line between local stock exchanges and the FSS to report violations.
Consequences for Cryptocurrencies Rise as Trading Increases
Meanwhile, exchanges are stepping up their activities to get ahead of the July 19 window. Bithumb, the second largest stock exchange in South Korealaunched the ICP Korean won trading market on June 12. Others are re-evaluate over 1,000 tokens previously listed, with the Digital Asset Exchange Alliance (DAXA) inform local users of plans to join 20 other local exchanges to review 1,333 tokens.
DAXA is an alliance that represents five major Korean cryptocurrency exchanges. This will help anticipate a possible delisting once the Virtual Asset User Protection Act comes into effect.
These regulatory adjustments arose from the TerraUSD and Luna saga in 2022, around the South Korean national currency Do Kwon.
Learn more: Terra (LUNA) Price Prediction 2024/2025/2030
As Cryptocurrency markets continue to bleedSome say that the hardening of regulations The price rally in South Korea could delay the price recovery. The speculation comes from the position of the Korean won against the US dollar (USD), the currency most commonly used for cryptocurrency trading.
While this competition solidifies South Korea’s position in the global cryptocurrency arena, it is a factor in the market’s long-awaited recovery as the country’s regulatory climate warms. As traders and exchanges adjust to this development, trading volumes are expected to fall, particularly among major trading venues, making the market more susceptible to sharp price movements and increased risks. volatility.
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