South Korea Sets Global Precedent With Virtual Asset Regulations

The Virtual Assets User Protection Act is now in effect, with the Financial Services Commission (FSC) outlining comprehensive guidelines on how it will be implemented. This regulation will come into force on July 19, 2024, creating an environment of safety for users and honesty in the virtual assets market.

The comprehensive regulations by the FSC are an excellent attempt at ensuring security in virtual assets trading. The Enforcement Decree of the Virtual Asset User Protection Act and the Virtual Asset Industry Supervision Regulations provide these rules to promote user protection and maintain market stability.

The FSC has recently released an extended list of entities exempted from the Virtual Asset User Protection Act. Such exemption would cover newly created exceptions such as CBDC deposits and non-fungible tokens. This deliberate action intends to ensure the law remains relevant considering the changing dynamics in virtual assets.

At the same time, regulations point out the necessity of classifying users’ money separately from organizational property and selecting a credible governing body. Also notable is the Enforcement Decree, which considers banks as institutions of deposit management, highlighting public belief and security concerns.

Also, these regulations mandate that more than 80% of its users’ virtual assets operate in cold storage to increase security procedures. The raised bar exceeds the threshold of 70%, which is aimed at heightening security against cryptocurrency fraudsters, hackers, etc.

Securing The Future: Virtual Asset Regulations For Stability & User Protection

However, regarding addressing possible problems, it dictates that such businesses engage in insurance coverage or mutual assistance or build deposits. Such an approach helps to take responsibility for cases like hacking or computer failure to develop a virtual asset ecosystem.

At the same time, the rules provide particular requirements for revealing hidden significant facts that underline the uniqueness of conditions characterizing the cryptocurrency market environment.

The regulations also clearly prohibit virtual asset financial institutions from unlawfully stopping making deposits or withdrawals. Emphasizing user support and prevention of unauthorized disturbances, the list tightly outlines specific exceptions.

Meanwhile, the regulations require virtual asset exchanges to monitor anomalous transactions to create a watchful environment closely. To demonstrate a commitment to user protection and market integrity, regulatory agencies need prompt reporting of suspected unfair trade practices.

Related Reading| Global Coalition: US, Japan, & South Korea Unite To Combat Crypto Money Laundering

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.

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