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South Korea to Tighten Regulations on Cryptocurrency Firms to Safeguard Digital Asset Consumers
South Korea’s Financial Services Commission (FSC) has broadened the scope of regulatory obligations for domestic cryptocurrency firms and digital asset service providers by enacting the Virtual Asset User Protection Act.
The financial market regulator in South Korea has opted to enhance the requirements for local crypto market participants to safeguard digital asset users in the area.
The Financial Services Commission has released regulations governing the oversight of the cryptocurrency market, which supplements the Virtual Asset User Protection Act, set to take effect on July 19, 2024. As outlined in the document:
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- Virtual asset service providers must maintain user funds separately from the company’s own assets.
- Cryptocurrency firms are required to keep a minimum of 80% of user assets in cold storage.
- Any company utilizing client-deposited assets must compensate deposit holders with interest based on the operating profit.
- Digital asset users should have the ability to withdraw their deposits at any time, with limitations only applicable to court orders and tax decisions.
- When offering services related to digital assets, companies are required to provide users with insurance coverage in the event of cyberattacks.
- The insurance fund for users of cryptocurrency firms must align with the level of customer investments.
- Cryptocurrency exchanges are obligated to monitor all transactions for signs of insider trading. Should any irregularities be detected, representatives of the trading platform must notify regulators. Failure to act will result in penalties.
The resolution specifies that the aforementioned regulatory standards will not be applicable to transactions involving non-fungible tokens (NFTs) and central bank digital currencies (CBDCs).
The Bank of Korea (BOK) is actively engaged in a digital won pilot initiative, intending to conduct a large-scale trial next year with the involvement of over 100,000 citizens.
Сообщение South Korea to Stiffen Rules for Crypto Companies to Protect Digital Asset Users появились сначала на CoinsPaid Media.
