On July 19, South Korea’s financial security regulator implemented new regulations aimed at protecting users’ assets on crypto exchanges. These measures, part of the much-anticipated “Virtual Asset User Protection Act,” mandate several protective steps for virtual asset service providers (VASPs).

According to a statement from South Korea’s Financial Services Commission (FSC) on July 17, VASPs must now ensure user protection by obtaining insurance against hacking and malicious attacks, segregating customer crypto assets from the exchange’s assets, and securely keeping customer deposits in banks.

VASPs are also required to conduct thorough due diligence to prevent money laundering on their platforms and report any suspicious transactions to the regulator. The FSC emphasized, “VASPs should maintain a surveillance system for suspicious transactions at all times and immediately report suspicious trading activities to the Financial Supervisory Service (FSS).

South Korea’s Financial Services Commission stated that the laws will take effect from July 19. Source: FSC

Those found to have engaged in unfair trading activities may face criminal punishment or penalty surcharges after investigations by financial and investigative authorities.”

Concerns Among South Korean Crypto Exchanges

Crypto exchanges in South Korea have raised concerns that the new regulations could lead to the simultaneous delisting of numerous tokens. Cointelegraph reported on July 3 that a group of 20 South Korean crypto exchanges will review 1,333 cryptocurrencies over the next six months as part of the new user protection laws. The Digital Asset Exchange Alliance (DAXA) noted that “the possibility of mass delisting occurring all at once is unlikely.”

Meanwhile, South Korea’s ruling party, the People’s Power Party, has proposed delaying the implementation of the country’s tax on crypto trading profits. On July 12, the party submitted the proposal, citing deteriorating sentiment towards crypto assets and arguing that rapidly imposing taxes on virtual assets is “not advisable at this time.”

Source: Coindesk