South Korea’s FSS to Bolster Crypto Regulations

In June, South Korea’s Virtual Asset User Protection Act was enacted, though it lacked a comprehensive set of regulations, remarked the leader of South Korea’s Financial Supervisory Service (FSS). As per domestic news sources, the FSS is currently formulating supplementary rules for this act. These guidelines are expected to be unveiled by January, well in advance of the law’s formal implementation.

During an audit by the South Korean National Assembly Political Affairs Committee on October 17, FSS’s chief, Lee Bok-hyeon, addressed concerns over South Koreans incurring losses from crypto “burger coins” – a colloquial term in Korea for foreign-issued cryptos traded domestically. As part of their commitment to refining the crypto space, the FSS plans to roll out standards encompassing the issuance, distribution, listing processes, and internal oversight of virtual assets. Additionally, a system for supervising and inspecting the virtual asset market is in the pipeline, as shared by local media reports.

The impending regulations are under consultation with the Digital Asset eXchange Association (DAXA), comprising eminent local crypto trading platforms like Upbit, Bithumb, Coinone, Korbit, and Gopax. Lee Bok-hyeon pointed out that the June-legislation was somewhat vague in its regulatory approach. Although it introduced punitive measures for contraventions, it didn’t adequately empower his organization. Addressing potential manipulative practices, he mentioned, “For any act hinting at distribution manipulation via staking or uneven disclosure, we’ll liaise with DAXA.” He further emphasized the absence of systems within DAXA or individual exchanges, contrasting it with existing frameworks in the securities domain.

Moreover, South Korea is taking measures to combat virtual-asset-related crimes by announcing the inception of the Joint Investigation Centre for Crypto Crimes. This unit will comprise a 30-member team sourced from various governmental bodies, including the FSS, National Tax Service, and Korea Customs Service, among others.

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