South Korea has introduced a new amendment to its Virtual Asset User Protection Act, allowing cryptocurrency exchanges to suspend transactions immediately for valid reasons. The measure addressed growing threats like hacking, money laundering, and fraud. Under this provision, exchanges can act without notifying users in advance, though they are required to inform them afterward.
The Virtual Asset User Protection Act, which took effect on July 19, 2024, aligns with South Korea’s broader strategy to expand its cryptocurrency market while ensuring user safety. Over recent months, regulators intensified efforts to curb unfair trading and threats, aligning with plans for digital asset growth and customer protection. These attempts demonstrate the government’s commitment to fostering a safe and genuinely transparent environment for cryptocurrency investors.
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Regulatory Focus Intensifies with Investor Protection Measures
The Financial Services Commission (FSC) legalized the Digital Asset Protection Foundation to enhance investor security. The purpose of this organization is to protect digital assets, including cryptocurrencies, whenever exchanges involved are insolvent. Following the United States election and consequently heightened market risks in the domain, South Korea has also intervened to enhance controls over the crypto transactions to improve the consumers’ security and subject the field to order.
The Financial Supervisory Service (FSS), in its latest amendment to the act, emphasized that exchanges should prioritize notifying users before transaction suspensions. The FSS acknowledged that urgent situations might require implementing plans without consultation. It urged exchanges to act rationally and ensure such measures are applied appropriately.
In a related development, South Korea’s largest crypto exchange, Upbit, is under regulatory scrutiny for allegedly breaching Know Your Customer (KYC) rules. Upon the renewal of a license, the FIU conducted a review that revealed that Upbit had signed up 600,000 users without authenticating them. This violation could result in fines of up to 100 million won, complicating its license renewal process.
Conclusion
The amendment to South Korea’s Virtual Asset User Protection Act reflects the country’s focus on protecting investors and improving compliance in the cryptocurrency sector. These measures demonstrate the government’s ongoing commitment to fostering a secure and regulated digital asset market.
Also Read: Binance’s Market Dominance Triggers South Korean Investigation into Local Crypto Exchanges
