South Korea Tightens Rules for Cryptocurrency Exchanges
Regulatory agencies in South Korea are to tighten compliance criteria for cryptocurrency firms. A recent report claimed that the licensed exchange noted that exchanges listed on these platforms for more than two years might not have to deal with the new stricter criteria. However, South Korean regulators are working on a new framework that contains stricter regulations.
Legislators in the region are working on streamlining various aspects of crypto trading services such as stricter criteria for token listings. These regulatory changes are likely to take effect for centralized exchanges before the end of the ongoing month or the start of the next.
As per local media outlets, South Korean financial regulators are to prohibit listing some digital assets.
The digital assets that have come under hack attacks on domestic exchanges are to be excluded from being accessible to retail investors. If the protocol administrators or exchange platforms security team is able to intercept, detect, and repel the attack entirely only then it may be allowed to qualify for a listing.
Additionally, foreign-based digital assets can be listed on local exchanges only if they have a white paper or technical manual that is published in local language.
Investor Protection Stance on Crypto
South Korean regulators have also noticed that licensed exchanges that are operating for more than two years may not have to comply with the new criteria. These regulatory changes mean that exchanges have to delist cryptocurrencies if they lack adequate disclosure such as accurate total circulation and reported amount to the investors.
The report further noticed that South Korean regulators are collecting feedback from the local exchange platforms on the matter. Since the second half of 2023, the Financial Supervisory Service is working on detailed listing guidelines by gathering insights from stakeholders such as the Digital Asset Exchange Association.
The Financial Services Commission or FSC is a regulatory agency that oversees and regulates financial markets and institutions in South Korea.
The government has also updated the Virtual Asset User Protection Act in the start of February. This legislation introduced the proposal to try crypto violations based on criminal code of conduct.
In this way, regulators may suggest fines, imprisonment time, and punishments based on the criminal trials. This means that violating parties can face up to one year behind bars or 3-5 times the fines of their realized profits.
Fraud Case Against Terraform Labs
The regulators in South Korea are taking a stringent stance towards the cryptocurrency sector in the pretext of Terraform Labs. The stablecoin project foiled resulting in more than $450 billion in losses.
On this front, Gyeonggi Provincial Tax Justice Department collected 6.2 billion won or $4.6 million in non-declared taxes for 2023 after introducing a digital tracking system to catch tax evaders.
The Financial Intelligence Unit (FIU) recently disclosed that local digital asset exchanges have earmarked more than 49% of suspicious transactions in 2023 in comparison to the previous year.
On 14th February, the FIU panned out a work plan for 2-24 highlighting important data projections and strategic plans for regulating the digital asset sector.
Changing Landscape of Crypto in Asia
Another article published in Cointelegraph shared details about the changing landscape of cryptocurrencies in Asia. The report suggested that Mega whales holding more than 10k Bitcoin are accumulating ahead of the approval of the first Bitcoin spot ETF in Hong Kong. The chances of the approval of the new investment vehicle are expected to take place in the upcoming week.
The Security Regulatory Commission of Hong Kong has reportedly approved 4 Bitcoin spot ETF ahead of the Bitcoin Halving. Local media reports suggest that these approvals can increase capital inflows in Bitcoin and generate more demand.
The approved ETFs are set to offer both retail and institutional investors investment opportunities. Hong Kong regulators may greenlit both Bitcoin and Ethereum-backed spot ETFs before 15th April.
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