South Korean cryptocurrency exchanges under increased scrutiny due to concerns over trading activities
South Korea’s financial watchdog is rolling out a new system to monitor unusual cryptocurrency trading, calling on exchanges to collaborate by providing internal data.
The Financial Supervisory Service (FSS) of South Korea is developing a monitoring mechanism aimed at scrutinizing abnormal trading activities in the cryptocurrency market. This initiative underscores the country’s commitment to bolstering transparency and regulatory oversight.
In a statement released on July 4th, the FSS encouraged domestic trading platforms to share their internal data with the system. This move is intended to ensure compliance with upcoming legislation effective from July 19th.
The system will specifically target trades that deviate from normal volume and price ranges, as well as transactions of significant size and unusually delayed executions, according to guidelines set by the FSS.
Commenting on these developments, Matt Younghoon Mok, a senior foreign attorney and partner at Lee & Ko in Seoul, highlighted potential challenges for alternative cryptocurrencies that may struggle to promptly meet regulatory requirements, as reported by Bloomberg.
In related news, South Korea’s Ministry of Justice has formed a task force to combat cryptocurrency-related crimes. This effort comes as South Korean crypto exchanges prepare to reassess more than 1,000 listed tokens in compliance with the Virtual Asset User Protection Act, aimed at safeguarding the rights and interests of crypto investors.
Despite the rigorous review process, the Digital Asset Exchange Alliance, representing five major Korean exchanges, anticipates few mass delistings over the next six months. They attribute this to proactive regulatory compliance measures already in place among domestic platforms.
The new regulatory framework mandates that crypto exchanges establish review committees. These committees will evaluate factors such as the credibility of the issuing entity, measures for user protection, technological and security standards, as well as adherence to regulatory requirements.
Nearly three dozen registered crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax, will conduct initial reviews to determine whether to maintain or delist each token under these guidelines.
For further insights, the Korea Institute of Finance has warned about the potential negative impact of spot cryptocurrency ETFs on the local economy.
