South Korea is looking to tighten regulations to prevent unfair trade in the industry. As a result, the Financial Services Commission issued instructions to five major cryptocurrency exchanges in the country to delist and classify digital assets with similar attributes to securities.
The implosion of the once-famous Terra ecosystem token was the first domino to fall in a series of other high-profile crashes that followed. The subsequent collapse of the hedge fund Three Arrows Capital (3AC) and the mass bankruptcy of exchanges and lenders such as Celsius Network, Voyager Digital, Genesis, and FTX had a huge impact on the Korean market.
According to local media reports, the FSC stated that many tokens listed and traded on existing crypto exchanges could be delisted or transferred to securities firms if proper guidelines are issued.
DAXA, the group of cryptocurrency exchanges representing South Korea’s largest companies such as Upbit, Bithumb, Coinone, Korbit, and Gopax — will be in charge of collecting the necessary feedback from each company through its trading support department and submitting it to the regulator. The deadline for submissions is February 9.
The FSC published its “work plan” for this year, emphasizing the need to improve the regulatory system for “the issuance and distribution of fractional investment projects and digital asset securities (security tokens).”
South Korea’s Ministry of Justice also revealed plans to develop a cryptocurrency tracking system called the “Virtual Currency Tracking System” to tackle money laundering and recover funds linked to criminal activities. The country essentially seeks to monitor transaction histories, extract transaction-related data, and check the origin of funds before and after remittances.
It is scheduled to be deployed in the first half of 2023. Development of the tracking and analysis system will begin in the second half of this year, according to South Korea's Ministry of Defense.
The developments come as South Korea’s police force has signed numerous contracts with different domestic exchanges to prevent blockchain crimes. The police department has also increased the number of blockchain security experts to help strengthen investigations.
