In the ever-evolving realm of cryptocurrencies, South Korean crypto exchanges find themselves navigating fresh regulatory terrain as authorities introduce steps to bolster consumer safeguards. Colin Wu, a reporter from the trusted Wu Blockchain, tweeted that starting this September, these exchanges are obliged to set aside a minimum of 3 billion won (about $2.28 million) in bank reserves, a strategic move to strengthen the sector against potential uncertainties.
South Korean authorities have required South Korean cryptocurrency exchanges that obtain accounts from banks to establish a minimum reserve of $2.28 million and a maximum of $1,520 since September to compensate users for losses in the event of accidents such as hacking.…
— Wu Blockchain (@WuBlockchain) August 28, 2023
According to a recent report, prominent Korean crypto platforms, including giants like Upbit and Bithumb, are already on a trajectory to embrace these changes. The Korea Federation of Banks unveiled these guidelines in July under the moniker “Virtual Asset Real-Name Account Operation Guidelines”, which requires exchanges to earmark at least 3 billion won or 30% of their daily average deposits to safeguard against potential liabilities. This reserve is designed to provide a safety net for users should unforeseen risks materialize. According to these guidelines, the maximum reserve size is capped at 20 billion won.
This development is part of a broader legislative move by South Korean policymakers to bolster investor security in the crypto realm. The enactment of 19 cryptocurrency-related bills in June grants significant authority to the Financial Services Commission and the Bank of Korea. Their roles encompass oversight of crypto operators and asset custodians, coupled with the power to impose penalties in cases of unfair trading of digital assets.
In a synchronized effort, the Financial Services Commission recently announced upcoming accounting regulations, signaling yet another layer of transparency for the industry. Starting next year, domestic companies must disclose their cryptocurrency holdings, fostering an environment of increased accountability. This disclosure mandate also extends to crypto issuers, who must share comprehensive information, including token specifics, business models, and internal accounting practices.
These steps signify South Korea’s commitment to nurturing a healthy and secure crypto ecosystem while setting a precedent for responsible global crypto regulation. As the digital landscape evolves, this vigilant approach aims to provide stability for investors and users alike, building confidence in the transformative potential of cryptocurrencies.
