South Korea introduces new regulations to protect cryptocurrency users from exchange collapses.
The Financial Services Commission (FSC) revealed on Tuesday that the enforcement decree, which will be implemented on July 19, is part of a wider effort to regulate the nation digital asset market.
From next month onwards, cryptocurrency investors in South Korea will receive greater safeguards as the government has approved new regulations to enhance user security in the event of a crypto exchange going bankrupt. The Financial Services Commission (FSC) revealed on Tuesday that the enforcement decree, which will be implemented on July 19, is part of a wider effort to regulate the nation's digital asset market.
The decree mandates that Virtual Asset Service Providers (VASPs) must separate customer deposits from their own funds and keep them in reputable financial institutions.
This is aimed at reducing the risks of exchange insolvencies and increasing trust in the Korean cryptocurrency market.
To further protect users, VASPs are required to store at least 80% of digital assets in cold storage, which is known for its high security against hacks and losses.
Depending on the security measures of a VASP, regulators may impose an even higher cold storage requirement to mitigate risks of fraud or closure.
The decree also introduces strict penalties for manipulative and fraudulent practices in the crypto market. Offenders could face a minimum of one year in prison or fines up to five times the profits gained from their illegal activities.
This is done to enhance user safety and discourage exploitation of the system.
Sara Ras
Comments
moosa11
This amount of weakness in cyber surveillance in South Korea is worrying for investors and users of cyberspace
