South Korea to Introduce Stricter Regulations Against Crypto Market Manipulation and Illegal Trading
South Korea is set to implement stricter regulations against crypto market manipulation and illegal trading. If the unfair profits derived from crypto exceed 5 billion won, violators may face life imprisonment. This development follows the recent case of Bitsonic CEO facing a 7-year prison sentence for conducting a 10-billion won fraud.
South Korea’s Virtual Asset User Protection Act
The Financial Services Commission has announced proactive measures ahead of the scheduled implementation of the Virtual Asset User Protection Act on July 19. The commission has issued a legislative notice regarding the Enforcement Decree of the Virtual Asset User Protection Act and the Virtual Asset Industry Supervision Regulations.
The Enforcement Decree and supervisory regulations aim to address concerns within the virtual asset landscape, focusing on prohibiting market manipulation, illegal trading practices, and the misuse of undisclosed material information related to virtual assets.
Crypto Exchanges Must Implement Rules
To enhance consumer protection, virtual asset exchanges and other business entities must comply with stringent regulatory directives issued by financial authorities.
Under the Virtual Asset User Protection Act, virtual asset exchanges must securely manage user deposits held in banks for virtual asset transactions. They must also store over 80% of users’ virtual assets’ economic value in offline storage to mitigate risks like hacking or system failures.
Virtual asset exchanges must acquire insurance coverage or set aside reserves equivalent to over 5% of the total economic value of virtual assets to counter potential risks. These measures will safeguard users’ assets in unforeseen circumstances.
The South Korean government will oversee compliance with the Virtual Asset User Protection Act by conducting routine inspections and requesting data and statements from relevant parties in cases of suspected violations.
In cases of non-compliance, the Financial Services Commission has the authority to take various measures against offending virtual asset business operators, including business suspension, corrective orders, legal complaints, or referrals to law enforcement agencies.
While implementing stricter regulations, South Korea aims to balance crypto innovation. The Financial Supervisory Service is discussing the possibility of allowing spot Bitcoin ETFs after their recent launch in the US.
Hot Take: Stricter Regulations in South Korea Aim to Safeguard the Crypto Market
South Korea’s move to introduce stricter regulations against crypto market manipulation and illegal trading demonstrates its commitment to maintaining regulatory standards within the virtual asset industry. These regulations aim to protect consumers and mitigate risks associated with hacking or system failures. By overseeing compliance and taking appropriate measures against offenders, South Korea seeks to create a safer environment for crypto investors. Additionally, the government’s consideration of spot Bitcoin ETFs shows a willingness to balance regulation with fostering innovation in the crypto space. Overall, these developments indicate South Korea’s proactive approach towards ensuring the integrity of its crypto market.
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