South Korea Strengthens Crypto Regulation with New Policy Phase

Highlights:

• South Korea has begun the second phase of crypto regulations to protect investors.
• FSC may soon allow corporate crypto accounts after an extensive review.
• South Korea has joined other countries in combating North Korean cyberattacks.

South Korean regulators have begun working on the second phase of cryptocurrency regulations to address various regulatory gaps. The Financial Services Commission of South Korea implemented the first set of crypto rules in July 2024. The commission met today to discuss and outline the major target areas for the upcoming bill.

South Korea’s New Crypto Regulations

The financial regulator of South Korea, prominently known as the Financial Services Commission has now reportedly started working on the second phase of the crypto rules to enhance user protection, as reported by a local news channel, EDaily.… pic.twitter.com/jl7PclT57G

— ICO Gem Hunters (@ICOGemHunters) January 15, 2025

Focus on Investor Protection and Regulatory Gaps

The Virtual Asset User Protection Act concentrated on protecting user deposits, prohibiting unfair trading practices, and slapping penalties on violators. The act requires service providers to keep at least 80% of user crypto deposits in cold storage. In addition, these funds should be separate from their own funds.

The second phase will tackle other issues, such as trading and custody services. The new phase will also introduce guidelines for the evaluation of virtual assets. Service providers will be required to meet strict entry and operational guidelines. The regulations aim to prevent conflict of interest and maintain accountability.

Pending Decisions on Corporate Crypto Accounts

The meeting also brought up the corporate crypto account issue. The accounts are effectively restricted but not formally banned at the moment. According to Vice Chairman Kim, the issue has been under review for quite some time. The review process has involved twelve subcommittees and task forces.

The FSC said it intends to devise measures for gradual approval and plans to begin with non-profit corporations. They will also introduce a system that will help review the eligibility of major shareholders of operators of virtual assets.

Kim also reassured that the policy review process is drawing to a close. The FSC will soon report the results and advance with the next steps. This will be a major shift as it will grant corporations the ability to open crypto accounts. This move is expected to encourage South Korean institutions to invest in cryptocurrencies and explore commercial crypto ventures.

Eradicating Cyber Threats and Boosting Global Collaboration

South Korea is also working with other countries to combat the increasing danger of North Korean cyberattacks. The Lazarus Group has been targeting crypto exchanges with various forms of attack. It is believed that the group is using the funds from the hacks to fund North Korea’s missile program.

The three nations are now working together on solutions to address the threat. Additionally, the joint statement they issued has stressed the need to strengthen cooperation between the public and the private sectors. They noted that the efforts of these hackers need to be disrupted, and one way to mitigate the attacks is by sharing information.

The United States and South Korea have cohosted symposiums with the public and private sectors to enhance coordination. The aim is to destroy the illicit financial activities of North Korea and prevent future attacks. Although the countries are putting up efforts to combat the groups, attacks continue to happen.

🚨 Global Powers Sound Alarm on North Korea’s Crypto Heists

In a rare show of trilateral unity, Japan, South Korea, and the US have issued a joint statement warning the global crypto industry of escalating threats from North Korean hackers. The notorious Lazarus Group was called… pic.twitter.com/Ytb2y8lob8

— Blockman (@blockmandev) January 14, 2025