South Korea's Financial Supervisory Service (FSS) has rolled out a comprehensive system for monitoring suspicious cryptocurrency transactions on exchanges. In a recent announcement on July 4, the FSS disclosed its collaboration with South Korean digital asset exchanges to establish a system for the continuous monitoring of unusual transactions. This real-time monitoring solution is slated to commence on July 19, coinciding with the enforcement of the Virtual Asset User Protection Act that was passed in 2023. The primary goal of this legislation is to regulate unfair trade practices and provide a protective framework for investors, necessitating the introduction of the monitoring system. Noteworthy crypto exchanges, falling under the ambit of the law, have put in place a mechanism that empowers the FSS to identify and filter out suspicious transactions, encompassing a significant portion of the country's trading volume. Upon identification, these exchanges will promptly inform the FSS of any potentially illicit activities via a dedicated data channel, especially transactions linked to market manipulation or other forms of illegal trading.

By June 16, a total of 29 crypto exchanges, including major platforms like Upbit, Bithumb, Coinone, Korbit, and Gopax, had been registered with the FSS and are now subject to surveillance under the Virtual Asset User Protection Act. Additionally, these exchanges are obligated to adhere to more stringent evaluation processes for listing tokens.

In the aftermath of the United States Securities and Exchange Commission's approval of spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds, South Korean authorities are deliberating on the potential implications of incorporating these investment vehicles into domestic exchanges. A researcher has advocated for comprehensive research prior to approval, citing the expected influx of capital into the crypto market.