Bitrabo Editorial
On July 19, South Korea will introduce its inaugural crypto act focusing on user protection. To comply with this, the South Korean financial authority has urged nearly 30 registered exchanges to review the 600+ cryptocurrencies listed on their platforms. Failure to adhere to the new law could lead to severe criminal consequences.
Mandatory Review of Crypto Assets by Exchanges
According to The Korea Times, registered exchanges are required to conduct a thorough review of the status of their listed crypto assets. Currently, there are hundreds of cryptocurrencies available for trading on the 29 exchanges operating in South Korea.
The Financial Intelligence Unit (FIU) in Korea reported that over 600 tokens were listed on local exchanges in the latter half of 2023. The FIU, operating under the Financial Services Commission (FSC), noted a 3.5% decrease compared to the previous half-year.
The Financial Supervisory Service (FSS) specified that all exchanges under their supervision must assess if the cryptocurrencies listed meet the stipulated criteria.
As per regulatory requirements, exchanges must review their listed tokens every six months and conduct maintenance assessments every three months. Major platforms like Upbit, Bithumb, Coinine, and Korbit are obliged to decide on the continued support for trading the reviewed assets during this process.
An official from the financial authorities mentioned that exchanges are mandated to establish an evaluation department within their companies. This department must assess the trustworthiness of token issuers and compliance with user protection measures, technology standards, security protocols, and regulatory requirements. Tokens that fall short of these criteria will be labeled as “cautionary” assets and may face delisting.
In cases like Bitcoin where the issuer remains unidentified, alternative criteria will be enforced, as outlined in the report.
South Korean Authorities Gear Up for Legislative Changes
In a February announcement, South Korean financial authorities revealed the enforcement of the Virtual Asset User Protection Act on July 19. The first Crypto Act in Korea aims to protect users’ assets and prevent unfair trading practices, empowering financial regulators to oversee the industry.
To ensure user safety and fund protection, crypto businesses must comply with the new legislation, failing which could result in criminal charges or fines. Violations may attract fines equivalent to three to five times the unfair profit, with potential criminal penalties including one-year imprisonment for business operators.
Notably, financial authorities are undergoing internal restructuring to develop policies concerning the crypto industry. The FSS is gearing up to monitor and investigate unfair virtual asset trading through two new bureaus.
Similarly, the FSC intends to establish a new bureau by the month’s end dedicated exclusively to regulating the virtual assets industry.