FSS Crackdown on Illegal crypto Transactions in South Korea
South Korea's Financial Supervisory Service (FSS) is intensifying its efforts to curb illegal transactions in the cryptocurrency space. The regulatory body recently announced plans to conduct inspections on several cryptocurrency exchanges and wallet services to ensure compliance with the law.
The move comes in response to the implementation of the Virtual Asset User Protection Act, which imposes strict penalties, including life imprisonment, for individuals involved in illicit cryptocurrency transactions exceeding 5 billion won ($3.7 million).
Targeted Exchanges and Services
The FSS has identified two Korean won-based cryptocurrency exchanges where it previously observed anomalous activities. In addition to these exchanges, three more digital asset platforms and a crypto wallet service will undergo scrutiny as part of the regulatory oversight.
According to reports, major cryptocurrency exchanges such as Upbit, Bithumb, Coinone, Gopax, and Korbit are among the entities slated for inspection. The FSS will also extend its oversight to include other market participants, including coin Market Exchange and various wallet and custodian services.
FSS Focus on Compliance and Security
During the inspections, the FSS will assess exchanges for any signs of illegal or suspicious transactions to ensure all crypto providers adhere to regulatory requirements. This includes measures to safeguard virtual assets and maintain comprehensive transaction records.
The regulator has emphasized its commitment to upholding market integrity through stringent enforcement actions against any illegal activities discovered during the inspections. It also plans to propose regulatory revisions to address any system deficiencies identified during the process.
“The FSS will push for the revision of regulations if necessary by identifying the areas in the system where improvements are needed.”
Furthermore, the FSS will conduct on-site inspections of operators with weak financial standings and inadequate internal controls related to crypto storage. Ensuring compliance with asset management regulations and user asset protection will be key focal points of the inspections.
The regulatory scrutiny will extend to assessing the segregation of user cryptocurrencies from platform assets, as well as evaluating providers' insurance coverage and reserve fund adequacy to mitigate risks such as cyberattacks.
As the FSS intensifies its efforts to regulate the cryptocurrency industry in South Korea, market participants can expect increased enforcement actions and regulatory oversight to promote market integrity and protect investor interests in the digital asset space.
Stay tuned for further updates on the outcome of the FSS inspections and their impact on the cryptocurrency landscape in South Korea.
