South Korea’s Inaugural Crypto Law Now in Effect: Key Regulations and Requirements

South Korea’s first crypto regulatory framework, the Virtual Asset User Protection Act, is now fully live, imposing strict regulations on crypto exchanges to enhance user protection and market integrity.

Points

• Crypto exchanges must keep 80% of user deposits in cold storage.
• Real-time monitoring and reporting of irregular trading activities are mandatory.
• The law aims to enhance user protection and market integrity.

South Korea has implemented its first comprehensive crypto regulatory framework, the Virtual Asset User Protection Act, after a year-long grace period. This landmark law aims to enhance user protection and market integrity in the rapidly evolving cryptocurrency industry.

Cold Storage Requirement: One of the key regulations mandates that crypto exchanges must keep 80% of user deposits in cold storage. This measure significantly reduces the risk of hacks and ensures the security of user funds.

Real-Time Monitoring: The act also requires real-time monitoring and reporting of irregular trading activities. This provision aims to prevent market manipulation and ensure fair trading practices, enhancing overall market integrity.

User Protection: By imposing these stringent requirements, the Virtual Asset User Protection Act seeks to protect users from potential risks associated with cryptocurrency trading. The law underscores South Korea’s commitment to creating a secure and transparent crypto market.

Explanation

• Cold Storage: Keeping 80% of user deposits in cold storage is a crucial security measure that protects against hacks and unauthorized access.
• Monitoring and Reporting: Real-time monitoring and reporting help prevent market manipulation and ensure fair trading practices.
• User Protection: The new regulations demonstrate South Korea’s dedication to safeguarding crypto investors and maintaining market integrity.