Overview
South Korea will implement its first cryptocurrency user protection law on July 19, 2024, marking a significant shift in the country's cryptocurrency market. With the introduction of this new regulation, 29 cryptocurrency exchanges registered with financial authorities, including Upbit, Bithumb, Coinone, Korbit, and Gopax, will comprehensively review the listing status of over 600 virtual assets currently being traded. This initiative aims to enhance market transparency, protect investor interests, and ensure the legal compliance of exchange operations.
Responsibilities of Cryptocurrency Exchanges
Under the new law, each exchange must establish a dedicated evaluation and decision-making body within their organization. This body will be responsible for assessing the reliability of the listed asset issuers, user protection measures, technical and security standards, and regulatory compliance. These evaluations aim to ensure that only virtual assets meeting specific criteria can continue trading in the market.
For assets like Bitcoin, which do not have a designated issuer, alternative review standards will be introduced. These standards will consider factors such as market demand, technical reliability, and security. If certain cryptocurrencies fail to meet these standards, they will be designated as cautionary assets and may face delisting risks.
Regular Review Mechanism
To maintain market stability and transparency, financial authorities require exchanges to conduct a comprehensive review of their listed assets every six months to decide whether to continue supporting the trading of these virtual assets. Following the initial review, exchanges will also be required to conduct a maintenance review every three months. This measure will ensure that all cryptocurrencies listed on exchanges consistently comply with the latest regulations and market standards.
A financial authority official stated, "Financial authorities will support cryptocurrency exchanges in conducting a comprehensive review of their listed assets every six months to decide whether to continue supporting virtual asset trading. After this initial review, exchanges will be required to conduct a maintenance review every three months."
Virtual Asset Trading Guidelines
To assist exchanges in better understanding and complying with the new regulations, financial authorities are drafting virtual asset trading guidelines. These guidelines aim to provide clear operational standards and compliance requirements for virtual asset exchanges. The guidelines will be issued when the new law comes into effect and will be immediately enforceable.
Changes in Regulatory Structure
To effectively formulate and implement cryptocurrency industry policies, the Financial Services Commission (FSC) of South Korea plans to establish a new bureau dedicated to virtual assets by the end of this month. This new bureau will oversee the overall regulatory framework for the virtual asset industry, ensuring market stability and transparency.
The amendment to the Financial Services Commission organization, which includes these details, will complete legislative notice on Monday and be submitted for Cabinet meeting review on Tuesday. Additionally, two new bureaus established by the Financial Supervisory Service at the end of last year are intensifying supervision and investigation of unfair practices in the virtual asset sector.
Current Market Status and Future Outlook
As of the second half of last year, the total number of cryptocurrencies listed on domestic exchanges in South Korea was approximately 600, representing a decrease of about 3.5% compared to the first half of last year. This data indicates that the market is gradually stabilizing, and investor confidence is increasing.
In the future, with the implementation of the new regulations and the improvement of the regulatory structure, the South Korean cryptocurrency market is expected to become more transparent and stable. This will not only help protect investor interests but also promote the healthy development of the market. The strict regulation and regular review mechanisms by financial authorities will ensure that virtual asset exchanges maintain high levels of compliance and security, thereby further enhancing market credibility.
Globally, the regulation of the cryptocurrency market continues to evolve and change. As a key player in the cryptocurrency market, South Korea's regulatory measures and policy developments will have a profound impact on the global market. With the implementation of the first cryptocurrency user protection law, South Korea is expected to set a new benchmark in global cryptocurrency regulation, serving as a model for other countries and regions to learn from.
Overall, the implementation of South Korea's first cryptocurrency user protection law marks a significant milestone in the development of the country's cryptocurrency market. By enhancing regulation and safeguarding investor interests, South Korea is poised to further solidify its position in the global cryptocurrency market and promote the healthy growth of the entire industry.
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