South Korea Tightens Crypto Oversight with New User Protection Law

• South Korea embraces a new regulatory framework to satisfy the public expectation of a crypto-friendly regulation.
• The FSC Chairman Kim Joo-hyun states that the new virtual asset division aligns with the nation’s regulatory vision.
• The country’s first law on virtual asset user protection is slated to be implemented on July 19.

South Korea is reportedly adopting a new crypto regulatory framework to align with public demand for a national policy supporting financial innovation. Kim Joo-hyun, Chairman of the South Korean Financial Services Commission (FSC), provided insights into the creation of a new virtual asset division that aligns with the nation’s vision.

During a recent meeting with Virtual Asset Service Providers (VASPs), the FSC Chairman emphasized the government’s goal of establishing a streamlined crypto regulatory framework in compliance with global financial standards.

South Korea’s first law on virtual asset user protection is set to be implemented on July 19. The new law is expected to prompt a review of the listing status of over 600 virtual assets currently traded. In a recent development, the FSC has notified 29 crypto exchanges, including Bithumb, Upbit, and Gopax, to regularly evaluate their tokens. The regulator stated:

“Financial authorities will support cryptocurrency exchanges to conduct reviews on their listed coins every six months regarding whether to continue supporting the trading of the virtual assets. After this initial review, the exchanges will be required to conduct maintenance reviews every three months.”

In related news, South Korea’s financial regulator, the Korean Financial Institute (KFI), cautioned against the potential disadvantages of Spot Exchange-Traded Funds (ETFs). Detailing the negative impacts of these ETFs, the financial watchdog stated, “Allowing such products can lead to adverse effects such as increased inefficiency in resource allocation and heightened exposure to crypto-related risks in the financial market.”

South Korea’s proactive approach to crypto regulation, emphasizing both investor protection and fostering innovation, may set a precedent for other nations grappling with the evolving digital asset landscape.

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