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Titled the “Virtual Asset User Protection Act,” VASPs must take several steps to ensure the protection of user’s crypto, according to a July 17 statement from South Korea’s Financial Services Commission (FSC).
These include taking out insurance against hacking and malicious attacks against the user’s crypto assets, keeping the customer’s crypto assets separate from the exchange’s assets, and a requirement to keep customer deposits “safely kept in banks.”
VASPs are also required to maintain a certain level of due diligence to prevent money laundering on their platforms and must report any suspicious transactions to the regulator.
“VASPs should maintain a surveillance system for suspicious transactions at all times and immediately report suspicious trading activities to the Financial Supervisory Service (FSS),” it stated.
“After going through investigations by the financial and investigative authorities, those who are found to have engaged in unfair trading activities may be subject to criminal punishment or penalty surcharge,” it added.
Concerns among South Korean crypto exchanges
Crypto exchanges in South Korea have recently voiced concerns that the rules would result in them simultaneously delisting a mass of tokens.
On July 3, Cointelegraph reported that a group of 20 South Korean crypto exchanges will review a total of 1,333 cryptocurrencies over the next six months as part of the new crypto user protection laws, meaning “the possibility of mass delisting occurring all at once is unlikely,” according to the Digital Asset Exchange Alliance (DAXA).
Meanwhile, South Korea’s ruling party, the People’s Power Party, officially proposed delaying the implementation of the country’s tax on crypto trading profits.
On July 12, the party submitted the proposal and noted that current sentiment toward crypto assets was deteriorating. The description stated that rapidly imposing taxes on virtual assets is “not advisable at this time.”
