South Korean regulator asks local crypto exchanges to monitor suspicious transactions and crack down on fraud

South Korean regulators are putting pressure on local cryptocurrency exchanges to root out suspicious transactions to protect investors under a new digital asset law that will take effect later this month. The Financial Supervisory Service (FSS) of South Korea said in a statement on Thursday that it is setting up a system to monitor abnormal cryptocurrency trading activities and urged exchanges to enter data and information into the system to ensure compliance with legislation that came into effect on July 19. The statement pointed out that red flags include trading volumes and prices outside the normal range, large transactions, and unusually slow execution speeds. The FSS said one of the goals of the measure is to find accounts associated with "suspicious" activities. Matt Younghoon Mok, senior foreign lawyer and partner at Lee & Ko Seoul Law Firm, said that the guidelines of the Financial Supervisory Service of South Korea "may pose a major challenge to altcoins that cannot quickly meet regulatory requirements." (Bloomberg) Earlier, 20 crypto exchanges in South Korea and the Digital Asset Exchange Alliance (DAXA) jointly formulated the self-regulatory code "Best Practices in Supporting Virtual Asset Transactions", which outlines the best practices for virtual asset listing and delisting. DAXA is an industry body composed of the five largest cryptocurrency exchanges in South Korea. The move is in preparation for the Virtual Asset User Protection Act, which is scheduled to be implemented on July 19. Once the bill comes into effect, all Korean crypto exchanges will officially implement these guidelines. In addition, about 1,333 virtual assets currently traded will be re-evaluated within six months from the date of the implementation of the guidelines. Between January and June this year, DAXA member exchanges delisted a total of 39 cryptocurrencies. Despite the increased scrutiny, the industry does not expect a large-scale one-time delisting.