South Korea Unveils Real-Time Crypto Monitoring System to Combat Market Manipulation
South Korea’s Financial Supervisory Service (FSS) has announced the launch of a comprehensive “continuous monitoring system” for cryptocurrency transactions, set to go live on July 19, 2024. This initiative coincides with the implementation of the Virtual Asset User Protection Act, marking a significant step in the country’s efforts to regulate its burgeoning crypto market.
The new system, developed in collaboration with major South Korean digital asset exchanges, aims to detect and prevent suspicious activities, including market manipulation and illegal trading practices. It will cover approximately 99.9% of the country’s trading volume, ensuring thorough market oversight.
Under this framework, crypto exchanges subject to the new law will be required to implement a system that allows authorities to receive reports on suspicious transactions. The FSS has prepared a standardized reporting format for transaction data submissions, enabling the regulator to efficiently filter out abnormal transactions from regular trading activities.
The agency has advised exchanges to form dedicated teams for monitoring dubious transactions and provided guidelines for identifying illegal activities through auditing information such as on-chain data. Suspicious activities will be reported to the FSS through a dedicated data transmission line.
As of June 16, 29 cryptocurrency exchanges, including major players like Upbit, Bithumb, Coinone, Korbit, and Gopax, were registered with the FSS and will be subject to this continuous monitoring. These exchanges will also face stricter review guidelines for token listings.
The Virtual Asset User Protection Act, passed in 2023, aims to regulate unfair trade practices and protect investors. It requires crypto service providers to safeguard over 80% of deposits in cold storage and enroll in insurance programs for potential user compensation in case of security breaches.
In parallel with these regulatory efforts, the South Korean crypto industry has taken proactive steps towards self-regulation. The Digital Asset Exchange Association, comprising 20 local crypto exchanges, recently announced plans to reevaluate more than 1,300 alternative token listings by the end of 2024 to ensure compliance with regulations.
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