On July 19, 2024, the Act on the Protection of Virtual Asset Users got here into impact in South Korea. The new crypto regulation goals to create a safer atmosphere for digital asset customers and set up a sound order within the digital asset market. However, the rapid affect on buying and selling volumes throughout main South Korean crypto exchanges, together with Upbit, has been important. These exchanges reported notable declines of their buying and selling volumes.
Impact On Upbit & Other South Korean CEXs
Upbit, based in October 2017 by Dunamu, shortly grew to become the most important crypto alternate in South Korea. Moreover, the Upbit exchange has maintained a number one place out there owing to its user-friendly interface and a variety of supported cryptocurrencies.
However, up to now 24 hours, Upbit’s buying and selling quantity plummeted by 29.4%, dropping to $1.50 billion, in accordance with CoinGecko. Also, this important decline underscores the market’s preliminary response to the brand new regulatory atmosphere.
Founded in 2013, Bithumb is one among South Korea’s oldest and most well-known cryptocurrency exchanges. It has constantly ranked among the many high 50 exchanges when it comes to buying and selling quantity and consumer base. Despite its prominence, Bithumb skilled a 24.7% drop in buying and selling quantity, reaching $425.22 million up to now 24 hours.
Coinone, established in 2014, has positioned itself as a significant participant within the South Korean crypto market. It gives a sturdy buying and selling platform and varied companies together with staking and lending. Coinone took the toughest hit among the many main exchanges, with buying and selling volumes plunging by 38.4% to $23.36 million. Moreover, this steep decline displays the market’s heightened sensitivity to regulatory adjustments.
As one among South Korea’s pioneering exchanges, Korbit was based in 2013 and has been instrumental in driving the adoption of cryptocurrencies within the nation. Korbit mirrored the affect on Coinone with a 38.4% to $5.07 million over the previous 24 hours.
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Overview Of The New Crypto Regulation
The Act on the Protection of Virtual Asset Users goals to deal with varied gaps within the earlier regulatory framework, which primarily targeted on anti-money laundering measures. Key provisions of South Korea’s new crypto regulation embrace:
1. Protection of Users’ Deposits and Assets: Virtual asset service suppliers (VASPs) should maintain clients’ deposits in secure custody at banks and pay curiosity on these deposits. Users’ digital belongings should be segregated from the VASPs’ belongings.
2. Insurance and Reserve Funds: VASPs are required to insure in opposition to liabilities from hacking or community failures or put aside a reserve fund for such contingencies.
3. Regulation of Unfair Trading Activities: The Act mandates surveillance for suspicious transactions. It additionally requires rapid reporting to South Korea’s Financial Supervisory Service (FSS). Those engaged in unfair buying and selling actions face extreme penalties, together with prison punishment or monetary penalties.
4. Supervision and Sanctioning Powers: The Financial Services Commission (FSC) and the FSS are granted the authority to oversee, examine, and sanction VASPs. This contains issuing corrective orders, suspending enterprise operations, and imposing administrative fines.
Moreover, in preparation for the brand new regulation, monetary authorities and VASPs have been working carefully to make sure compliance. The South Korea‘s FSC ready detailed subordinate statutes, and the FSS provided on-site consultations and a roadmap for VASPs.
Additionally, a pilot check was carried out to evaluate readiness. The Digital Asset Exchange Alliance (DAXA) and 20 digital asset alternate service suppliers additionally developed greatest follow tips to assist self-regulation throughout the trade.
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