New Virtual Asset User Protection Act

The Virtual Asset User Protection Act, set to take effect on July 19, aims to enhance regulatory compliance within the cryptocurrency sector. This legislation introduces a stringent framework, known as the best practice plan, designed to support virtual asset transactions.

Regulatory Framework

Recent local media reports indicate that the South Korean government has finalized this rigorous framework, which establishes stringent criteria that cryptocurrencies must meet to remain listed on domestic exchanges. Unlike the current system, where exchanges are responsible for conducting their own reviews, the new approach involves financial authorities setting standardized criteria for all listed tokens.

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Listing Screenings and Criteria

The central focus of the new regulations is on listing screenings. Under this framework, exchanges will reassess their support for each virtual asset every six months, with subsequent reviews occurring every three months. Cryptocurrencies that fail to meet the prescribed standards risk having their transaction support suspended.

Detailed Assessment Criteria

– Reliability Checks: These will involve examining the issuer’s information disclosure practices and the circulation of tokens.
– User Protection: This will focus on blockchain activity tracking and the accessibility of white papers.
– Technical Security: Cryptocurrencies must have a clean hacking record and transparent smart contract source codes.
– Issuer Requirements: Issuers must demonstrate comprehensive disclosure, sound issuance plans, and credible business histories.

Impact on the Crypto Market

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South Korean authorities will reserve the right to challenge listings based on qualitative criteria, except for assets that have a clean track record on well-regulated overseas exchanges. This regulatory overhaul is expected to significantly impact the local crypto scene, particularly affecting altcoins with low trading volumes and problematic disclosures. South Korea’s 29 domestic crypto exchanges, including prominent ones like Upbit, will need to adhere to these new standards.

These changes reflect South Korea’s commitment to enhancing the security and reliability of its cryptocurrency market, aiming to protect users and ensure robust compliance within the sector.

Source: crypotimes.io

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