South Korea will implement its first crypto act on user protection on July 19. As a result, the South Korean financial authority has notified nearly 30 registered exchanges to review the over 600 cryptocurrencies they listed on them. Under the new law, companies that fail to comply could face severe criminal punishment.
Crypto Exchanges Required To Review Assets’ Listing
The Korea Times reported on Sunday that registered exchanges must comprehensively review the listing status of their listed crypto assets. Hundreds of cryptocurrencies are currently being traded on the 29 exchanges operating in South Korea.
The Korean Financial Intelligence Unit (FIU) figures showed that over 600 tokens were listed on crypto exchanges in South Korea during the second half of 2023. FIU’s report, under the Financial Services Commission (FSC), highlighted that this number was a 3.5% drop compared to the first half of 2023.
The Financial Supervisory Service (FSS) revealed that all exchanges registered to the financial regulator must assess if their listed cryptocurrencies meet the watchdog’s criteria.
An officer from the financial authorities said exchanges are under the obligation to review their listed tokens every six months and conduct “maintenance reviews” every three months. During this process, the platforms, including Upbit, Bithumb, Coinine, and Korbit, must decide if they can continue supporting the trading of the reviewed crypto asset.
Statement from an FSS officer about the new requirement. Source: The Korea Times
As part of the new law, exchanges are needed to create an evaluation and decision-making department within each company. The department must evaluate the reliability of the tokens’ issuers.
Additionally, they must determine if issuers meet user protection measures, technology, and security standards and their regulatory compliance. The tokens that don’t meet the required criteria will be labeled “cautionary” assets and face delisting.
According to the report, alternative criteria will be specified in the case of cryptocurrencies like Bitcoin, in which “the issuer is not specified.”
South Korean Authorities Gearing Up For New Legislation
In February, South Korean financial authorities announced that their Virtual Asset User Protection Act would be enforced on July 19. Korea’s first Crypto Act aims to protect user’s assets and prevent “unfair trading practices” in the country. Additionally, the new law seeks to grant financial regulators the power to supervise the industry.
As reported by Bitcoinist, crypto businesses must ensure users’ safety and safeguard their funds. The violation of the new legislation could result in criminal charges or fines for business operators. Virtual asset companies could be fined the equivalent of three to five times the unfair profit, while the criminal charges could end in one-year imprisonment.
Per The Korea Times report, the financial authorities are “preparing a change in their internal structures to devise policies on the crypto industry.” The FSS is preparing to supervise and investigate unfair virtual asset trading at its two new bureaus.
Similarly, the FSC plans to establish a new bureau at the end of the month. The office will exclusively oversee the virtual assets industry’s regulatory framework.
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