As an analyst with a background in finance and experience in the crypto industry, I view this development as a significant step forward for South Korea’s regulatory framework for cryptocurrencies. The integration of the FSS transaction monitoring system with local crypto exchanges will undoubtedly enhance financial security and market integrity.
Beginning July 19, South Korea’s financial regulatory body, Financial Supervisory Service (FSS), will activate the linking of its transaction monitoring system with local crypto exchanges. This alignment coincides with the implementation of the long-anticipated Virtual Asset User Protection Act.
Using advanced technology, the system can now detect and flag approximately 99.9% of potentially illicit or suspicious crypto transactions taking place on regulated exchanges. A total of approximately 29 exchanges are under observation, with any identified questionable transactions promptly reported to the Financial Security Service (FSS) for further investigation.
As a researcher studying the regulatory landscape of cryptocurrency exchanges in South Korea, I can explain that platforms such as Coinone, Bithumb, Korbit, and Upbit will adhere to the integration of monitoring systems in line with the expanded scope of the Virtual Asset User Protection Act. Suspicious transactions, including those involving money laundering or market manipulation, will be identified and reported to the Financial Services Commission (FSS) for further investigation and action.
The Virtual Asset User Protection Act, now in effect, forbids unethical business dealings in the virtual asset market. In accordance, virtual asset trading platforms must remain vigilant and closely scrutinize any suspicious transactions.
With respect to the monitoring system, it was stated that the Financial Supervisory Service collaborated with exchanges in creating the “Guidelines for Continuous Monitoring of E-commerce.” This initiative aimed to facilitate the uninterrupted compliance with legal obligations by virtual asset exchanges. Furthermore, it contributed significantly to the setup and functioning of the e-commerce surveillance system.
After the failure of Terraform Labs and the subsequent four-year imprisonment of its founder Do Kwon in Montenegro, there was a need for greater protection for users of virtual assets. The Virtual Asset User Protection Act was therefore enacted as a response to these events. Although Terraform Labs was based in Singapore and licensed in South Korea, Do Kwon was a South Korean national.
The failure of Terraform Labs resulted in the erasure of billions of dollars, causing significant losses for many investors and pushing several businesses towards bankruptcy. The South Korean administration asserts that this is the most substantial financial fraud the nation has ever experienced.
Image by Pete Linforth from Pixabay
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2024-07-09 16:15