South Korea is making significant strides in regulating its cryptocurrency market with a new law focused on virtual asset user protection. Set to take effect on July 19, this legislation introduces stringent requirements for all registered crypto exchanges in the country, aiming to enhance market integrity and user security.
Key Provisions of the New Law
The new regulation mandates comprehensive and periodic reviews of all tokens listed on crypto exchanges. Here’s a detailed look at what the law entails:
Initial Comprehensive Review:
All 29 registered crypto exchanges, including major platforms such as Upbit, Bithumb, Coinone, Korbit, and Gopax, are required to conduct an in-depth evaluation of over 600 tokens currently listed.
This initial review will assess whether each token meets the new regulatory standards.
Ongoing Maintenance Reviews:
Every Six Months: Exchanges must perform detailed reviews to ensure all listed tokens continue to comply with the regulatory guidelines.
Every Three Months: Exchanges must conduct maintenance reviews to uphold the compliance and integrity of the listed tokens.
Stricter Review Guidelines:
The law sets out precise procedures for listing new tokens and reassessing existing ones.
Exchanges must now follow more rigorous guidelines to prevent the listing of tokens from compromised projects or those with unresolved security issues.
Implications for Non-Compliance
The new law imposes severe penalties for any violations, reflecting the government’s commitment to a secure and transparent crypto market:
Criminal Punishments: Fixed-term jail sentences of more than one year.
Fines: Three to five times the amount of illegal profits made from non-compliance.
Enhancing Market Monitoring and Security
This move is part of a broader effort by the South Korean government to improve market monitoring and security. The Financial Service Commission (FSC) is taking proactive steps to ensure the robustness of the crypto ecosystem:
Prohibiting Compromised Tokens: The guidelines will prevent tokens from projects with security breaches and unresolved issues from being listed on local exchanges.
Developing New Regulatory Guidelines: The FSC is also working on new guidelines for crypto transactions on exchanges, expected to be implemented alongside the user protection law.
Organizational Changes for Efficient Policy Making
To better manage the cryptocurrency sector, the FSC is restructuring its organizational framework:
New Bureau for Virtual Assets: The FSC plans to establish a dedicated bureau to focus exclusively on virtual assets, overseeing the entire regulatory framework for the industry.
Upcoming Proposals: A proposal for this new bureau will be introduced on June 17 and reviewed by June 18, aiming to streamline policy-making processes.
Looking Ahead
This new law marks a pivotal moment in South Korea’s approach to cryptocurrency regulation. By enforcing regular and stringent reviews of token listings, the government aims to foster a more secure and transparent trading environment.
For investors and crypto enthusiasts, these developments signal a more regulated and reliable market, potentially increasing trust and participation in the cryptocurrency space. As South Korea continues to lead in regulatory measures, other countries may follow suit, contributing to the global effort of integrating cryptocurrencies into mainstream financial systems securely.
Stay tuned for more updates on this evolving regulatory landscape. For more insights and detailed discussions, follow our blog and join the conversation!
