South Korea has begun the second phase of regulating the crypto market aimed at investor protection and market growth. The regulation includes measures to increase transparency, scrutinize exchanges, and create a safer environment for investors.
Enhancing Crypto Market Transparency
The Financial Services Commission (FSC) in South Korea plans to close legislative gaps by creating real-name accounts for entities participating in the virtual assets arena. This will ensure greater transparency and corporation-focused regulations. Corporations limited due to the lack of revolving laws will be offered legal certainty. As the crypto market matures in South Korea, a shift towards corporate rather than individual investors is being made to meet international standards.
Scrutinizing Crypto Exchanges
The second phase of legislation will also focus on operation and qualification requirements for virtual asset service providers. These providers will face stricter anti-money laundering (AML) and know-your-customer (KYC) standards. These steps are crucial for preventing illicit financial activities and ensuring the industry operates with integrity and security. In this context, South Korean authorities plan to investigate crypto exchanges involved in irregular activities. The Financial Supervisory Service (FSS) will target two Korean won-based exchanges and several other digital asset platforms to mitigate potential risks.
Safer Investment Climate
The FSC emphasizes the importance of collaborating with international regulatory bodies to maintain global compatibility in its regulatory approach. This cooperation aims to reduce the risk of regulatory arbitrage. By working with global regulators, the FSC seeks to create a safer environment for investors while promoting innovation in the crypto space. Investor protection remains a key priority, with the FSC taking steps to prevent fraud and market manipulation. Over the past year, South Korea’s Joint Virtual Asset Investigation Team seized $107 million in assets linked to crypto-related fraud, demonstrating the government's serious approach to regulation and enforcement.
South Korea is actively working towards creating a safer and more transparent environment for the development of its crypto market, taking measures to enhance regulation, scrutinize exchanges, and protect investors.
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