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22/07/24
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South Korean Regulator Announces Implementation of New Regulations for VASPs
On July 17, the Financial Services Commission (FSC) of South Korea published a press release noting that the Act on the Protection of Virtual Asset Users will take effect from July 19. The aim of the Act is to regulate the virtual asset market towards protecting users.
The major provisions of the Act include the protection of deposits from users and virtual assets, regulating unfair trading activities like price manipulation, permitting the supervision, inspection and sanctioning of VASPs by financial regulators, as well as investigating and acting appropriately against those involved in unfair trading activities.
VASPs are required to keep deposits from customers at banks and provide interest on their deposits. They must not mingle users’ virtual assets with theirs but keep them separately, and must “have in their custody the types and volume of virtual assets their customers have.”
Likewise, insurance against liabilities due to hacks or other types of network malfunctioning incidents or setting aside a reserve fund to cover accidents must be in place. Regarding unfair trading activities, VASPs are required to have a surveillance system to capture suspicious transactions at all times for immediate reporting to relevant authorities.
“After going through investigations by the financial and investigative authorities, those who are found to have engaged in unfair trading activities may be subject to criminal punishment or penalty surcharge. With the implementation of this law, the financial authorities will have the authority to supervise, inspect, and sanction VASPs,” reads the press release.
Recently, the People’s Power Party in South Korea took steps to delay the implementation of tax on profits from cryptocurrency trading. The party submitted a proposal to delay it, noting a decline in the current sentiment toward cryptocurrency assets.
Over the past several weeks, the FSC reportedly asked registered cryptocurrency exchanges to ensure regular evaluation of the tokens listed on their exchanges and determine whether to continue providing trading services related to such tokens.
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