Originally published on: September 04, 2024
South Korea’s Financial Supervisory Service (FSS) is set to launch an inspection of virtual asset exchanges to weed out any suspicious or illegal transactions. According to local media, the FSS will impose strict penalties on exchanges caught engaging in illicit activities during the inspections and will push for regulatory changes to address any system flaws.
During the inspections, the FSS will specifically focus on identifying suspicious transactions and ensuring that crypto exchanges and affiliated companies are in compliance with existing regulations. This move comes in the wake of South Korea’s implementation of the “Virtual Asset User Protection Act” on July 19, aimed at safeguarding cryptocurrency investors from hacks and fraudulent activities, as well as ensuring the segregation of customer assets from exchange assets.
In a bid to crack down on money laundering, virtual asset service providers (VASPs) in South Korea, such as major players like Upbit, Bithumb, and Coinone, are required to maintain stringent due diligence practices and report any questionable transactions to regulators. Cryptocurrencies like Bitcoin are subject to anti-money laundering and securities regulations overseen by the Financial Securities Commission in South Korea.
This increased scrutiny of virtual asset trading platforms is part of a global trend towards regulating digital asset markets to protect investors. In Hong Kong, running an unlicensed virtual asset trading platform is now a criminal offense, while Coinbase’s UK arm recently faced a hefty fine for breaching user onboarding agreements.
As jurisdictions worldwide tighten their grip on the cryptocurrency industry, investors and traders are urged to stay informed and adhere to existing regulations to navigate this evolving landscape. Stay updated on the latest market insights and investment opportunities by subscribing to our Markets Outlook newsletter.
