The Financial Supervisory Service (FSS) of South Korea has initiated a 24/7 surveillance program with the objective of identifying and halting fraudulent practices within the cryptocurrency sector.

In a recent announcement, the FSS revealed that this initiative is in adherence to the imminent enforcement of the Virtual Asset User Protection Act, scheduled to come into effect on July 19, marking South Korea's first comprehensive legislation regulating cryptocurrencies.

Between January and May of this year, the FSS collaborated closely with local exchanges to establish a real-time monitoring system. By standardizing the submission of transaction data based on the Korea Exchange (KRX) format, the FSS aimed to promptly flag any abnormal activities.

The surveillance system has been intricately designed to sort through transactions, utilizing models and metric indicators generated through simulations to detect irregularities effectively. Notably, prominent local exchanges, handling the majority of cryptocurrency trades in South Korea, have already integrated the latest surveillance system to ensure compliance with regulatory standards.

To combat illicit practices in the cryptocurrency sphere, the FSS advised exchanges to form specialized monitoring teams and utilize auditing data, including on-chain details, to detect signs of malfeasance. The agency emphasized the misuse of a token's confidential information for unfair trading, price manipulation, and fabrication of circulation data as illicit activities in the cryptocurrency domain.

To facilitate the swift reporting of suspicious transactions, the FSS introduced a dedicated hotline for exchanges while enhancing regulatory oversight measures. The impending enforcement of the Virtual Asset User Protection Act, South Korea's primary cryptocurrency regulation scheduled for full enactment on July 19, aims to deter unethical behaviors in cryptocurrency investments, including the exploitation of confidential data and market manipulation. The legislation mandates that 80% of deposits be kept in cold storage and users be provided with compensation insurance.

In parallel, legislators in South Korea are formulating a supplementary bill to the User Protection Act, focusing on matters such as the regulation of stablecoins and the potential authorization of institutional cryptocurrency trading. Meanwhile, local exchanges have embraced a new code of conduct and are evaluating 1,333 cryptocurrencies traded within the country to enhance market integrity and bolster investor confidence in regulated cryptocurrency markets, influencing the future regulatory landscape in South Korea.