The South Korean National Assembly passed the ‘Virtual Asset User Protection Act’ in July this year to enhance investor protection. This act consolidates 19 cryptocurrency-related bills, defines digital assets, and establishes penalties for illegal activities like insider trading, market manipulation, and unfair trading. The law is set to officially come into effect in July 2024.

On the other hand, on November 29th, the Financial Supervisory Service (FSS) of South Korea announced the establishment of the ‘Virtual Asset Regulatory Bureau’ and the ‘Virtual Asset Investigation Bureau.’

The South Korean government is taking proactive measures to establish market order, particularly in response to the significant growth observed in the virtual asset market.

South Korea Regulatory Authorities in Crypto

So far, South Korea's virtual asset market has been primarily regulated by the Financial Intelligence Unit (FIU) under the Financial Services Commission, which is responsible for overseeing the reporting matters of virtual asset service providers.

The Virtual Assets Investigation Bureau will be a department focusing on investigating improper transactions and disruptive behaviours in markets. Its primary mission is to combat market disruption, prevent disorderly market conditions caused by improper transactions, and safeguard users from potential harm.

Strong Crypto Trading Trend in South Korea

In the cryptocurrency market, South Korea is undoubtedly considered one of the 'crypto trading' nations. However, in recent months, several cryptocurrency custody platforms have gone bankrupt one after another, prompting the South Korean government to strengthen cryptocurrency regulation.

Officials from the South Korean Financial Supervisory Service disclosed that, in addition to passing the 'Virtual Asset User Protection Law' in July, we recently established an external expert task force related to virtual asset listings. Discussions have commenced on formulating guidelines for virtual asset listing, maintenance, and delisting regulations.

The plan is to conclude several months before the implementation of the "Virtual Assets User Protection Act" in July next year and report to Congress. The guidelines are under review to enhance the effectiveness of regulations while exploring industry-led compliance methods.