South Korea Tightens Grip on Crypto with Real-Time Transaction Monitoring
South Korea’s financial regulator, the Financial Supervisory Service (FSS), is taking a significant step towards enhancing oversight of the cryptocurrency market. The FSS has launched a “continuous monitoring system” designed to detect and flag suspicious crypto transactions on exchanges in real-time.
This new system, announced on July 4th, is a direct consequence of the Virtual Asset User Protection Act, a legislative measure passed in 2023. The Act aims to establish a regulatory framework for the crypto industry, focusing on protecting investors from unfair trade practices and ensuring market integrity.
The FSS has collaborated with major South Korean cryptocurrency exchanges to develop this advanced monitoring system. It will be implemented on July 19th, coinciding with the official enactment of the Virtual Asset User Protection Act.
According to the FSS, the system leverages technology employed by the exchanges to screen transactions for abnormalities. This system is estimated to cover roughly 99.9% of the country’s total crypto trading volume. Once an exchange’s system identifies a suspicious transaction, such as those suspected of market manipulation or other illegal activities, it will be reported to the FSS through a dedicated data transmission line.
Enhanced Exchange Regulatory Oversight
As of June 16th, 29 crypto exchanges operating in South Korea, including prominent names like Upbit, Bithumb, Coinone, Korbit, and Gopax, were registered with the FSS. These exchanges will be subject to the new monitoring system and the broader regulatory framework established by the Virtual Asset User Protection Act. The Act also mandates stricter review guidelines for these exchanges when considering new token listings.
The recent approval of spot Bitcoin and Ether exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) has sparked discussions within South Korean financial authorities. Officials are carefully evaluating the potential impact of allowing similar investment vehicles to be listed on domestic exchanges.
One researcher, while acknowledging the potential benefits, has cautioned against a hasty decision. They emphasize the need for thorough analysis before granting approval, given the significant amount of capital that could potentially flow into the South Korean crypto market as a result.
South Korea’s implementation of a real-time crypto transaction monitoring system signifies a proactive approach to regulating the burgeoning digital asset market. This initiative, coupled with the Virtual Asset User Protection Act, demonstrates the government’s commitment to fostering a more secure and transparent crypto environment for investors and participants alike. The ongoing scrutiny of the US ETF market highlights the cautious yet evolving stance of South Korean regulators as they navigate the complexities of the crypto landscape.
