South Korea’s New Crypto Laws Implemented This Month

Summary:
South Korea’s one-year grace period for the Virtual Asset User Protection Act ends this month, leading to significant changes in crypto regulations. Enacted in July 2023, this legislation mandates that the Financial Services Commission (FSC) and the Bank of Korea jointly oversee crypto operators and custodians. Key measures include requiring exchanges to store 80% of deposits in cold storage and enroll in insurance programs. Additionally, the Financial Supervisory Service (FSS) will launch a 24-hour surveillance system for local exchanges and has developed a standardized reporting format to detect abnormal transactions.
Exchanges like Bithumb are ramping up activities ahead of the July 19 deadline, with significant reevaluations and potential delistings of tokens by the Digital Asset eXchange Alliance (DAXA). These regulatory changes stem from the TerraUSD and Luna collapse in 2022. As regulations tighten, trading volumes are expected to drop, potentially delaying market recovery and increasing volatility.
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