The Financial Supervisory Service (FSS) in South Korea is actively working on new regulations to complement the Virtual Asset User Protection Act, which was passed earlier in 2023. The head of FSS, Lee Bok-hyeon, announced that these additional regulations are expected to be ready before the Virtual Asset User Protection Act becomes effective in January. This move comes in response to the recent audit conducted by the South Korean National Assembly's Political Affairs Committee, which addressed concerns about the Hamburger Coin cryptocurrency.
According to reports from the audit, the FSS is focusing on developing procedures for listing virtual assets, establishing internal controls, defining issuance and distribution standards, and implementing a comprehensive supervision and inspection system for virtual asset markets. Lee indicated that these forthcoming regulations are being discussed in collaboration with the Digital Asset Exchange Association (DAXA), an association that includes major local cryptocurrency exchanges such as Upbit, Bithumb, Coinone, Korbit, and Gopax.
Lee emphasized that the law passed in June did not provide adequate regulatory details and did not grant enough power to the FSS. Although it introduced provisions for criminal liability in the case of violations, it lacked specifics and the enforcement mechanisms needed for effective oversight. In light of this, Lee mentioned that they would engage in discussions with DAXA, particularly regarding issues like potential manipulation through staking or unfair disclosure. He highlighted the absence of mechanisms similar to the securities industry's processes for screening and regulation within DAXA and individual exchanges.
Furthermore, South Korean law enforcement has revealed plans to establish a joint virtual asset crime investigation unit called the Cryptocurrency Crime Joint Investigation Center. This agency will be composed of 30 staff members drawn from various government agencies, including the FSS, National Tax Service, Korea Customs Service, and others. It represents a significant step towards enhancing the oversight and regulation of the cryptocurrency and virtual asset market in South Korea, which has witnessed significant growth and popularity in recent years.
