- The guidelines directed the exchanges to allocate at least 3 billion won or the equivalent of 30% of their daily average deposits as reserves.
- The legislation also gives authorities the power to impose sanctions in cases of unfair trading practices.
South Korean cryptocurrency exchanges are gearing up to implement a new regulatory requirement requiring them to reserve a minimum of 3 billion won (about $2.3 million) in bank accounts starting in September. This move comes as part of South Korea’s intensified efforts to improve consumer protection measures within the growing crypto industry.
Well-known exchanges in South Korea, including Upbit and Bithumb, appear to be aligning themselves with the new regulations, according to recent figures. reports from the local media channel News1. These requirements are laid down in guidelines released in July by the Korean Federation of Banks, indicating the crypto industry’s increasing involvement with regulatory authorities.
The guidelines, aptly named “Virtual Asset Real-Name Account Operation Guidelines,” establish the expectation that cryptocurrency exchanges will allocate at least 3 billion won or the equivalent of 30% of their daily average deposits as reserves.
This financial buffer is intended to ensure that exchanges can meet their obligations to users in the event of any risk incidents. However, there is a cap on the size of these funds, limiting them to 20 billion won, in accordance with the guidelines provided.
New regulations aim to strengthen consumer protection in the growing crypto industry
The heightened scrutiny of South Korea’s cryptocurrency industry is the result of legislative efforts aimed at strengthening investor protection. In June, the country’s lawmakers approved 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 cryptocurrency operators and asset custodians.
In addition, the new legislation gives authorities the power to impose sanctions in cases involving unfair trading practices in the field of virtual assets. This revision of the legislation reflects South Korea’s commitment to creating a more transparent and secure environment for its crypto investors.
Complementing these regulatory changes, the Financial Services Commission last month announced its plans to require domestic companies to disclose their cryptocurrency holdings.
This disclosure requirement takes effect next year and is part of the wider effort to increase transparency within the crypto space. In addition to disclosing cryptocurrency holdings, crypto issuers will be required to provide extensive information, including token specifications, business models, and internal accounting policies.