South Korean cryptocurrency exchanges are gearing up to comply with a new regulatory requirement that mandates them to reserve a minimum of 3 billion won (approximately $2.3 million) in bank accounts starting in September. The move is part of South Korea’s efforts to enhance consumer protection measures within the growing cryptocurrency industry.
New Regulations for Cryptocurrency Exchanges
Notable exchanges in South Korea, including Upbit and Bithumb, are aligning themselves with the new regulations, as reported by local media outlet News. These requirements were outlined in guidelines released by the Korea Federation of Banks in July, indicating the increasing engagement of the crypto industry with regulatory authorities.
The guidelines, named “Virtual Asset Real-Name Account Operation Guidelines,” specify that cryptocurrency exchanges must allocate at least 3 billion won or 30% of their daily average deposits as reserves. This financial buffer is meant to ensure that exchanges can fulfill their obligations to users in case of any risk incidents. However, there is a cap on the size of these funds, limited to 20 billion won according to the provided guidelines.
Strengthening Consumer Protection
The heightened scrutiny over the cryptocurrency industry in South Korea is a result of legislative efforts aimed at bolstering investor protection. In June, the nation’s lawmakers passed a package of 19 bills focused on crypto-related matters. These bills grant the Financial Services Commission and the Bank of Korea the authority to oversee both crypto operators and asset custodians.
The newly enacted legislation also empowers authorities to impose penalties in cases involving unfair trading practices within the realm of virtual assets. This legislative overhaul reflects South Korea’s commitment to creating a more transparent and secure environment for its cryptocurrency investors.
Enhancing Transparency
In addition to the reserve requirements, the Financial Services Commission announced its plans last month to introduce a requirement for domestic companies to disclose their cryptocurrency holdings. This disclosure requirement is set to take effect next year and is part of the broader effort to enhance transparency within the crypto space.
Crypto issuers will be obligated to provide comprehensive information, including token specifics, business models, and internal accounting policies. This move aims to provide investors with a clearer understanding of the companies they are investing in and promote transparency within the industry.
