South Korean exchanges are racing to implement new monitoring systems. The first law on crypto user protection will take effect this week.
- South Korea crypto exchanges to implement new monitoring systems by 19th July. The virtual assets user protection act (VAUPA) will introduce regulations to prevent unfair crypto trading practices.
South Korea has one of the most vibrant crypto industry in the world. The country hosts one of the largest cryptocurrency markets globally, thus acquiring the name altcoin-heavy.
According to Kaiko data, South Korea’s local currency was the most used for trading crypto in 2024 Q1. However, the country has lacked clear regulations, leaving loopholes for unfair trading practices.
Now, the South Korean authorities are introducing new regulations.
New South Korea crypto regulations
The Korean Financial Services Commission has worked for the last five months to realize VAUPA. The user protection for virtual assets is set to take effect on 19th July.
Accordingly, the law aims to prevent unfair trading practices such as fraudulent transactions or price manipulation in south Korea market.
When it takes effect, the authorities will have the legal mandate to trace crypto transactions through well-established and structured monitoring systems. These systems will help eliminate and follow any fraudulent and suspicious activities.
According to the report by Finance magnates, various exchange platforms, such as Upbit, have been actively working to establish systems to monitor unfair trading activities.
The law will mandate all exchange platforms to adhere to and prove their compliance with set regulations.
South Korea tightens control of crypto market
Previous South Korea crypto laws have received considerable backlash, especially from foreign exchanges. For instance, Binance suspended operations in the country and Japanese firm Bitfront three years ago.
Stakeholders in the crypto industry view the new law as a government way of controlling the sector. The FSS, through the regulation, will have the authority to examine all crypto transactions to identify and remove any red flags.
Equally, the FSS will have increased scrutiny for crypto activities. Thus, transactions that have a high volume, unusual price range, slow execution time, and large amounts will attract the authority’s attention.
According to the authorities, these measures aim to enhance investor safety and protect them from crypto crimes that lead to the loss of huge investments.
Impact on crypto community
Through the new regulations, regulatory authorities are increasing pressure on local crypto exchanges to remove all questionable trading in South Korea. This move is a win for honest traders as it enhances transparency, thus protecting them from fraud.
These regulations are inspired to avoid disasters such as the Terraform collapse in 2022 that left millions of users in losses.
Equally, with the stakeholders’ self-regulatory initiatives, investors will enjoy better protection and will ensure fewer crypto-related crimes occur.
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