New regulations from South Korea’s financial security regulator, aimed at protecting users buying and storing crypto assets with virtual asset service providers (VASPs), came into effect on July 19.
Named the “Virtual Asset User Protection Act,” the law requires VASPs to implement several measures to safeguard users’ crypto, as outlined in a July 17 statement from South Korea’s Financial Services Commission (FSC).
Key mandates include obtaining insurance against hacking and malicious attacks on user assets, keeping customer crypto assets separate from the exchange’s holdings, and ensuring customer deposits are securely held in banks.
Additionally, VASPs must conduct due diligence to prevent money laundering and report suspicious transactions to the regulator.
“VASPs should maintain a surveillance system for suspicious transactions at all times and immediately report suspicious trading activities to the Financial Supervisory Service (FSS),” the statement emphasized.
READ MORE: CrowdStrike CEO Clarifies Downtime Cause: No Security Breach, Stock Drops 15%
“After investigations by the financial and investigative authorities, those found guilty of unfair trading activities may face criminal punishment or penalty surcharge,” it further noted.
Concerns have been raised by South Korean crypto exchanges regarding potential mass delisting of tokens due to the new regulations.
On July 3, Cointelegraph reported that 20 South Korean crypto exchanges plan to review 1,333 cryptocurrencies over the next six months as part of these laws.
According to the Digital Asset Exchange Alliance (DAXA), “the possibility of mass delisting occurring all at once is unlikely.”
In parallel, South Korea’s ruling party, the People’s Power Party, proposed delaying the implementation of the country’s tax on crypto trading profits.
On July 12, the party submitted this proposal, citing deteriorating sentiment towards crypto assets.
They argued that swiftly imposing taxes on virtual assets is “not advisable at this time.”
To submit a crypto press release (PR), send an email to sales@cryptointelligence.co.uk.
