South Korea Crypto Laws Come into Force
22 Jul, 2024 ● Crypto News
The new regulations from South Korea's financial security regulator, aimed at safeguarding users who buy and store crypto assets with virtual asset service providers (VASPs), came into effect on July 19.
Called the "Virtual Asset User Protection Act," VASPs are required to undertake several measures to protect users' crypto assets, as stated by South Korea's Financial Services Commission (FSC) on July 17.
These measures include obtaining insurance against hacking and malicious attacks on users' crypto assets, keeping customer crypto assets separate from the exchange's assets, and ensuring customer deposits are "safely kept in banks."
VASPs must also conduct due diligence to prevent money laundering on their platforms and report any 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 FSC stated.
"After investigations by financial and investigative authorities, those found to have engaged in unfair trading activities may face criminal punishment or penalty surcharges," it added.
Crypto exchanges in South Korea have recently expressed concerns that the new rules could lead to a mass delisting of tokens.
On July 3, Cointelegraph reported that 20 South Korean crypto exchanges would review 1,333 cryptocurrencies over the next six months as part of the new crypto user protection laws, making "the possibility of mass delisting occurring all at once unlikely," according to the Digital Asset Exchange Alliance (DAXA).
Meanwhile, South Korea's ruling party, the People’s Power Party, officially proposed delaying the implementation of the country's tax on crypto trading profits.
On July 12, the party submitted the proposal, noting that current sentiment towards crypto assets was deteriorating and rapidly imposing taxes on virtual assets is "not advisable at this time."
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