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South Korea’s Financial Supervisory Service (FSS) is preparing to implement stricter regulations for cryptocurrency exchanges, with the possibility of legal consequences for noncompliance. The FSS will initiate inspections of virtual asset exchanges to identify any suspicious or illegal transactions. The regulatory body aims to enforce market order by imposing severe penalties for detected illegal activities and will seek regulatory revisions if necessary to address systemic issues, according to local news sources.
During these inspections, the FSS will scrutinize transactions for irregularities and ensure that cryptocurrency exchanges and related entities adhere to existing regulations. The recent introduction of South Korea’s “Virtual Asset User Protection Act” on July 19 further emphasizes user protection in the {crypto} space. This legislation mandates measures such as insuring against hacks and malicious attacks on user assets and ensuring the segregation of customer assets from those of the exchange.
The Financial Services Commission (FSC) in South Korea is responsible for overseeing virtual asset service providers (VASPs). Major exchanges in the country, including Upbit, Bithumb, and Coinone, are required to adhere to rigorous due diligence practices to prevent money laundering and report any suspicious activities to the regulator. Cryptocurrencies, such as Bitcoin, are subject to specific anti-money laundering and securities regulations enforced by the FSC, with regulatory guidelines playing a significant role in compliance.
Globally, regulatory scrutiny of digital asset trading platforms is intensifying. In Hong Kong, operating an unlicensed virtual asset trading platform has been criminalized since June 1. Although some platforms have received initial approvals, full licensing remains pending for several applicants.
Additionally, in July, Coinbase’s UK division faced a $4.5 million fine imposed by a British regulator for violating a voluntary agreement related to user onboarding processes. These developments reflect a broader trend of increasing regulatory oversight in the cryptocurrency sector worldwide.
