South Korea’s new regulations aimed at protecting crypto asset users take effect, imposing strict requirements on virtual asset service providers （VASPs）.
Points
- South Korea’s new regulations for crypto exchanges came into force on July 19.
- VASPs must insure against hacking and keep customer assets separate from exchange assets.
- Exchanges must maintain due diligence to prevent money laundering.
- Concerns arise over potential mass delisting of tokens due to the new rules.
South Korea’s Financial Services Commission （FSC） has implemented new regulations designed to protect users who buy and store crypto assets with virtual asset service providers （VASPs）. The “Virtual Asset User Protection Act” took effect on July 19, mandating several critical steps for VASPs to ensure user protection.
VASPs are now required to take out insurance against hacking and malicious attacks that could affect users’ crypto assets. Additionally, customer assets must be kept separate from the exchange’s own assets, and customer deposits must be securely held in banks. These measures aim to safeguard users’ funds and enhance the overall security of crypto exchanges operating in South Korea.
Furthermore, VASPs are obligated to maintain a certain level of due diligence to prevent money laundering on their platforms. They must report any suspicious transactions to the Financial Supervisory Service （FSS） immediately. The FSC stated, “VASPs should maintain a surveillance system for suspicious transactions at all times and immediately report suspicious trading activities to the Financial Supervisory Service （FSS）.”
Failure to comply with these regulations may result in criminal punishment or penalty surcharges following investigations by financial and investigative authorities. This stringent regulatory framework underscores the government’s commitment to protecting crypto asset users and maintaining the integrity of the financial system.
However, South Korean crypto exchanges have expressed concerns that these new rules could lead to the simultaneous delisting of numerous tokens. On July 3, Cointelegraph reported that a group of 20 South Korean crypto exchanges would review a total of 1,333 cryptocurrencies over the next six months as part of the new crypto user protection laws. The Digital Asset Exchange Alliance （DAXA） suggested that while mass delisting is unlikely, the comprehensive review process could impact many tokens.
Meanwhile, South Korea’s ruling party, the People’s Power Party, has officially proposed delaying the implementation of the country’s tax on crypto trading profits. On July 12, the party submitted a proposal noting that current sentiment towards crypto assets was deteriorating. The description stated that rapidly imposing taxes on virtual assets is “not advisable at this time.”
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解説
- South Korea’s new regulations aim to protect crypto asset users by imposing strict requirements on VASPs, including insurance against hacking and secure custody of customer assets.
- VASPs must also conduct due diligence to prevent money laundering and report suspicious activities to the Financial Supervisory Service （FSS）.
- Failure to comply with these regulations can result in severe penalties, highlighting the government’s commitment to safeguarding the crypto ecosystem.
- Concerns about potential mass delisting of tokens have been raised by South Korean crypto exchanges, as they review a large number of cryptocurrencies for compliance.
- The proposal to delay the implementation of a tax on crypto trading profits reflects the government’s cautious approach to regulating the rapidly evolving crypto market.