New Regulations on Cryptocurrency in South Korea Take Effect | Live Bitcoin News
The Virtual Assets User Protection Act in South Korea officially went into effect on July 19, providing regulatory guidance for crypto exchanges operating in the country. Formulated by the Financial Services Committee (FSC), many consider these regulations to be stringent.
According to a press release issued by the FSC, the Act aims to establish order in the virtual asset market and ensure user protection. It emphasizes protecting user deposits and assets, regulating unfair trading practices like price manipulation, and granting financial regulators the authority to supervise, inspect, and penalize Virtual Asset Service Providers (VASPs).
Under the new act, VASPs such as exchanges must use custodians or banks to securely store user assets separately from their own funds. They are required to maintain sufficient liquidity to safeguard against market volatility, facilitate user withdrawals, and have insurance coverage in place for potential emergencies like hacks or exploits.
Additionally, VASPs must implement anti-money laundering measures, maintain open communication channels to report suspicious activities to the Financial Supervisory Service (FSS), and comply with regulatory requirements to protect users. The FSC is empowered to enforce sanctions against VASPs found breaching these regulations.
The law prohibits VASPs from engaging in practices that could manipulate the market and jeopardize user investments. South Korean regulators have the authority to delist assets that violate securities laws and anti-money laundering criteria, although some exchanges have expressed concerns about potential challenges associated with asset blacklisting.
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