The South Korean government has taken a significant step towards combating cryptocurrency-related fraud by unveiling a comprehensive real-time monitoring system. This new initiative, announced by the Financial Supervisory Service (FSS), aims to safeguard the crypto market and protect investors from illicit activities.
24-Hour Surveillance System
The FSS has developed a 24-hour surveillance system in collaboration with local cryptocurrency exchanges. This system will continuously screen the market for any suspicious activities, such as the use of undisclosed token information for unfair trading, price manipulation, and forged circulation data.
The new monitoring system is set to go live on July 19, the same day South Korea’s first regulatory framework for crypto investor protection, the Virtual Asset User Protection Act, comes into effect.
Standardized Reporting and Auditing
To build the monitoring system, the FSS worked on establishing a standardized reporting format for transaction data submissions from local exchanges. This data is then analyzed to separate irregular transactions from the rest, using benchmarked criteria from the Korea Exchange (KRX).
The agency has also provided guidelines to exchanges on how to uncover illegalities in the detected transactions through auditing information, including on-chain data.
Exchanges’ Cooperation and Hotline
Major South Korean exchanges, which account for 99.9% of the country’s crypto trades, have already implemented the monitoring system based on the FSS’s latest criteria. These exchanges have also established a dedicated team within their organizations to monitor dubious transactions.
Furthermore, the exchanges have set up a hotline with the FSS to report any transactions they believe to be in violation of local regulations.
Upcoming Crypto Legislation
South Korea’s inaugural crypto law, the Virtual Asset User Protection Act, aims to eradicate illicit market practices, such as using undisclosed information for crypto investments, manipulating market prices, and engaging in fraudulent transactions.
The new law also requires crypto service providers to safeguard over 80% of deposits in cold storage to protect user funds and enroll in insurance programs for potential user compensation in the event of security breaches.
The South Korean government is currently developing a follow-up legislation for the user protection act, where topics such as stablecoin regulation and allowing institutional trading of crypto are being discussed.
Conclusion
The South Korean government’s proactive approach to real-time monitoring and the upcoming crypto legislation demonstrate its commitment to fostering a secure and transparent cryptocurrency market. These measures are expected to play a crucial role in preventing and addressing fraud, ultimately strengthening investor confidence and driving the responsible growth of the digital asset ecosystem in the country.
