In an attempt to strengthen investor protection with the implementation of a new digital asset law later this month, South Korean officials are putting more pressure on local cryptocurrency exchanges to eliminate questionable trading.
The Financial Supervisory Service stated in a statement on Thursday that it is putting up a mechanism to keep an eye out for odd cryptocurrency trading behavior. In order to ensure compliance with the legislation that goes into effect on July 19, exchanges are recommended to upload data and information into the system, it added.
The statement lists large transactions, unusually sluggish execution, and trades outside of typical volume and price ranges as red flags. Finding accounts connected to “suspected” behavior is one goal, according to the FSS.
A key player in the cryptocurrency sector is South Korea. The most popular currency for transferring in and out of digital assets earlier this year was the won, overtaking the dollar. The majority of trade involves riskier smaller coins rather than the dominant cryptocurrency, Bitcoin, and about 10% of the population is exposed to tokens.
Using a word used in the crypto industry to refer to lesser digital assets, Matt Younghoon Mok, senior foreign attorney and partner with Lee & Ko in Seoul, stated that the FSS rules could provide serious difficulties for altcoins that are unable to quickly comply with regulatory standards.
For the next six months, South Korean exchanges will be checking listings of over a thousand cryptocurrencies to make sure they comply with the Virtual Asset User Protection Act. In response to concerns that the act may soon choke off some of the country’s most famous token trading in highly speculative markets, an industry association stated on Tuesday that it is doubtful that there will be any rapid “mass” delistings.
Practices like pump-and-dump scams that cause investors to lose a lot of money and wash trading, which artificially inflates prices, are well-known in the cryptocurrency world. Globally, regulations are becoming more stringent in order to exert more control over the digital asset market.
It is probable that traders will keep an eye on how the user protection regulations and associated clauses are implemented to determine whether the price of cryptocurrencies is affected. After a robust first quarter, Bitcoin and smaller tokens have been having trouble lately.
