- South Korea crypto exchanges to implement new monitoring systems by 19th July.
- The virtual assets user protection act (VAUPA) will introduce regulations to prevent unfair crypto trading practices.
As a seasoned financial analyst with extensive experience in the cryptocurrency market, I have closely followed the developments in South Korea’s crypto industry. South Korea has long been a significant player in the global crypto market due to its large trading volume and vibrant community of traders. However, the lack of clear regulations has left room for unfair trading practices, leading to concerns over investor safety.
As a researcher studying the global crypto market, I can attest to the fact that South Korea stands out as a hub for vibrant crypto activity. With one of the largest cryptocurrency markets in the world, this dynamic country has earned the moniker “altcoin-heavy.”
In the first quarter of 2024, South Korea’s local currency emerged as the preferred choice for cryptocurrency trading based on Kaiko data. Yet, the absence of definitive regulations in this domain creates opportunities for unscrupulous activities.
Now, the South Korean authorities are introducing new regulations.
New South Korea crypto regulations
For the past five months, the Korean Financial Services Commission has been diligently working towards implementing VAUPA (Virtual Asset User Protection Act). This important legislation for safeguarding users of virtual assets will officially begin on July 19th.
In line with this, South Korean law is designed to prohibit unethical business dealings, including deceitful transactions and price distortion, within its markets.
As a financial analyst, I can tell you that once implemented, regulatory bodies will be granted the authority to monitor cryptocurrency transactions via organized and established tracking systems. These systems are designed to identify and pursue any potentially illegal or questionable activities, enhancing overall security within the crypto market.
Based on Finance Magnates’ report, several cryptocurrency exchanges including Upbit, are taking proactive measures to set up monitoring systems for unjust trading practices.
All exchange platforms will be required by law to follow specific regulations and provide proof of their compliance.
South Korea tightens control of crypto market
As a researcher studying the regulatory landscape of cryptocurrencies, I’ve come across significant criticism directed towards previous legislation in South Korea. Foreign crypto exchanges, such as Binance and Bitfront, have responded by suspending their operations within the country about three years ago.
In the crypto community, the new law is perceived as a move by the government to exert control over the industry. Under this legislation, the Financial Stability Supervision (FSS) gains the power to scrutinize every crypto transaction in search of potential risks or suspicious activities.
In addition, the Financial Surveillance Squad (FSS) will subject crypto transactions to closer examination. Transactions with significant volumes, abnormal price fluctuations, prolonged processing times, and substantial values are likely to pique regulatory interest.
Based on what officials have shared, these actions are intended to bolster investor security and shield them from significant financial losses due to cryptocurrency-related misdeeds.
Impact on crypto community
Under the latest rules, Korean regulatory bodies are intensifying scrutiny over dubious cryptocurrency transactions at domestic exchanges. This development benefits fair traders by promoting greater openness and safeguarding them against deceitful activities.
To prevent tragedies akin to the Terraform collapse of 2022, which caused significant financial hardships for millions of affected users, these regulations have been put in place.
Similarly, when stakeholders take the lead with their regulatory efforts in the crypto sector, investors stand to benefit from enhanced security and a reduced incidence of crypto-related misconduct.
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2024-07-16 18:16