South Korea’s Financial Regulator Tightens Oversight on Crypto Exchanges
South Korea’s Financial Supervisory Service (FSS) has announced plans to increase supervision of cryptocurrency trading platforms under its jurisdiction in order to crack down on fraudulent transactions.
In a notice issued on July 4, the regulator stated that local exchanges will be required to set up a “continuous monitoring system for unfair transactions” and report any “abnormal transactions” through a dedicated communication channel.
The FSS highlighted the importance of virtual asset exchanges fulfilling their legal obligations and revealed that guidelines for monitoring abnormal transactions have been prepared in collaboration with exchanges.
This new monitoring system is set to be implemented on July 19, aligning with the introduction of South Korea’s first regulatory framework for protecting crypto investors, known as the Virtual Asset User Protection Act.
Addressing concerns of a potential mass delisting of tokens, the Digital Asset Exchange Alliance (DAXA) and 20 local exchanges released the “Best Practices for Supporting Digital Asset Transactions” guideline on July 2. This framework enables exchanges to review and potentially delist digital assets, with a less stringent review process suggested for assets with over two years of trading experience in regulated overseas markets.
The news comes after reports surfaced indicating that South Korean exchanges could review the listing of more than 1,000 altcoins in the next six months to ensure compliance with regulations, sparking fears of mass delistings. However, these recent developments aim to enhance market stability, protect investors, and combat financial crimes in the cryptocurrency sector.
South Korea’s proactive stance on crypto regulation signals a commitment to establishing high standards for exchange operations and safeguarding consumer interests, establishing the country as a frontrunner in addressing challenges within the crypto industry.
