Regulation
Korean cryptocurrency exchanges to implement VAUPA.
- South Korean cryptocurrency exchanges to implement new monitoring systems by July 19.
- The Virtual Assets User Protection Act (VAUPA) will introduce regulations aimed at preventing unfair practices in cryptocurrency trading.
South Korea has one of the most vibrant cryptocurrency industries in the world. The country is home to one of the largest cryptocurrency markets globally, thus earning the name altcoin-heavy.
Second Kaiko data, South Korea’s local currency was the most used for cryptocurrency trading in Q1 2024. However, the country lacks clear regulations, leaving loopholes for unfair trading practices.
Now South Korean authorities are introducing new regulations.
New Cryptocurrency Regulations in South Korea
The Korean Financial Services Commission has been working for the past five months to implement VAUPA. User protection for virtual assets is expected to go into effect on July 19.
Accordingly, the law aims to prevent unfair business practices, such as fraudulent transactions or price manipulation in the South Korean market.
Once it comes into force, authorities will have a legal mandate to track crypto transactions through well-established and structured monitoring systems. These systems will help eliminate and track any fraudulent and suspicious activity.
According to the report of The financial magnatesSeveral exchange platforms, such as Upbit, have been actively working to establish systems to monitor unfair trading activities.
The law will require all exchange platforms to comply and demonstrate compliance with the established regulations.
South Korea tightens control over cryptocurrency market
Previous South Korean cryptocurrency laws have received significant backlash, especially from foreign exchanges. For example, Binance suspended operations in the country, as did Japanese firm Bitfront three years ago.
Cryptocurrency industry stakeholders see the new law as a government way to control the industry. The FSS, through regulation, will have the authority to examine all cryptocurrency transactions to identify and remove any red flags.
Likewise, the FSS will have stricter control over crypto assets. Therefore, transactions that have high volume, unusual price range, slow execution times, and large amounts will attract the attention of the authority.
According to the authorities, these measures aim to improve the safety of investors and protect them from cryptocurrency-related crimes, which can cause the loss of large investments.
Impact on the crypto community
Through the new regulations, regulators are increasing pressure on local cryptocurrency exchanges to remove all questionable trading in South Korea. This move is a win for honest traders as it increases transparency, thus protecting them from fraud.
These regulations were designed to avoid disasters like the Terraform crash in 2022, which cost millions of users their lives.
Likewise, self-regulatory initiatives by stakeholders will provide investors with better protection and ensure that fewer crypto-related crimes occur.