South Korea to Implement Non-Stop Crypto Transaction Surveillance
South Korea to Implement Non-Stop Crypto Transaction Surveillance
The Financial Supervisory Service (FSS) of South Korea has unveiled a 24/7 crypto transaction monitoring system aimed at curbing fraudulent activities within the cryptocurrency sector.
Launch and Implementation
According to a press release on July 4, the FSS announced that this system would go live on July 19, 2024, coinciding with the enforcement of the Virtual Asset User Protection Act. This new surveillance system will utilize a reporting format for transaction data sourced from the Korea Exchange (KRX) to detect any irregularities. From January to May 2024, the FSS collaborated with various digital asset exchanges across South Korea to develop this system.
Major Exchange Involvement
Significant local exchanges, which handle 99.9% of South Korea's crypto trading volume, have already established monitoring systems based on the latest criteria set forth by the FSS.
Guidance and Recommendations
The FSS has advised exchanges to form dedicated teams within their organizations to monitor suspicious transactions. These teams should follow the guidelines to uncover legal violations through audit data such as on-chain information. The targeted illegal activities within the crypto sphere include insider trading, price manipulation, and data falsification.
Enhanced Reporting and Regulation
To facilitate swift reporting of suspicious transactions, the new system will offer a dedicated hotline and enhance regulatory oversight within the country.
New Virtual Asset Law Implementation
Starting July 19, South Korea will enforce its first comprehensive cryptocurrency regulation, the Virtual Asset User Protection Act. This law aims to crack down on illicit market activities, such as the use of confidential information for unfair trading, market price manipulation, and fraudulent transactions.
Insurance and Security Requirements
Under this law, virtual asset service providers are required to enroll in an insurance program to compensate users in the event of security incidents. Additionally, they must ensure that 80% of user deposits are kept in cold storage for security purposes.
Compliance Obligations
The FSS has mandated that local exchanges in South Korea review more than 600 cryptocurrencies listed on their platforms. As of June 16, around 29 crypto exchanges, including major players like Upbit, Bithumb, Coinone, Korbit, and Gopax, have registered with the FSS and are subject to the new regulations.
Conclusion
South Korea's proactive stance towards cryptocurrency regulation, highlighted by the upcoming implementation of a 24/7 transaction monitoring system and the Virtual Asset User Protection Act, underscores the country's commitment to fostering a secure and transparent digital asset ecosystem. The FSS’s collaboration with major digital asset exchanges and the establishment of stringent monitoring criteria signify a robust approach to mitigating risks such as fraud, insider trading, and market manipulation. By requiring exchanges to form dedicated monitoring teams and offering enhanced reporting mechanisms, South Korea is setting a precedent for comprehensive regulatory frameworks in the cryptocurrency space.
These measures, coupled with the enforcement of the new Virtual Asset User Protection Act, reflect a balanced approach to innovation and security in the crypto industry. By mandating insurance programs and the secure handling of user deposits, South Korea aims to protect investors and build trust within the market. As these regulations take effect, they will not only curb illegal activities but also contribute to the maturation and stabilization of the cryptocurrency market in South Korea, potentially serving as a model for other nations grappling with the challenges of regulating the fast-evolving world of digital assets.
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*Disclaimer:
This content aims to enrich reader information. Always conduct independent research and use disposable income before investing. All buying, selling, and crypto asset investment activities are the reader's responsibility.
