South Korea’s cryptocurrency market is currently experiencing a period of increased regulation and scrutiny by financial authorities. The impending implementation of the Virtual Asset User Protection Act has caused panic selling among investors due to fears of potential coin delistings under new regulations. The Financial Supervisory Service (FSS) has clarified that it does not directly review or approve listings but instead supported the development of best practices for virtual asset transactions.
As part of the Virtual Asset Act, virtual asset exchanges will soon be required to adhere to new transaction support best practices, including rigorous review processes to ensure compliance with listing maintenance requirements. Criteria for reviews include reliability of the issuing entity, user protection measures, technological security, legal compliance, and qualitative factors such as business plan revisions and issuance volume.
In addition to regulatory changes under the Virtual Asset User Protection Act, the Financial Services Commission of South Korea has introduced new guidelines categorizing certain non-fungible tokens (NFTs) as virtual assets, similar to cryptocurrencies. These regulations aim to provide clarity to the evolving digital asset market and ensure that specific NFTs are subject to the same regulations as traditional cryptocurrencies.
Crypto.com’s app launch in South Korea was recently postponed due to a regulatory review of the exchange’s anti-money laundering procedures. Korean financial regulators conducted an urgent on-site assessment following identified AML issues in Crypto.com’s data. The exchange emphasized its commitment to maintaining high AML standards and stated that the delay in the app launch is to ensure regulatory compliance.
South Korea’s cryptocurrency laws allow for the use of cryptocurrencies but subject them to strict securities and anti-money laundering laws. The implementation of the Digital Asset Basic Act in June 2024 aims to balance investor protection with blockchain innovation and update tax laws on cryptocurrencies. With regulatory changes and developments in the cryptocurrency market, South Korea’s approach to digital asset governance is evolving towards a more organized framework.