South Korea is looking to amp up regulations to prevent unfair trade in the industry. As such, the Financial Services Commission issued instructions to five major crypto exchanges in the country to delist and classify digital assets that have similar properties to that of securities.
The implosion of the once-prominent Terra ecosystem tokens was the first domino to fall in an ensuing series of other high-profile collapses. The subsequent failure of hedge fund Three Arrows Capital (3AC) and a slew of bankrupted exchanges and lenders such as Celsius Network, Voyager Digital, Genesis, and FTX greatly impacted the South Korean market.
As a result, regulators in the country have called for setting up comprehensive crypto regulations to protect investors.
FSC’s Order
According to a local media report, the FSC stated that many tokens listed and traded on existing crypto exchanges could be delisted or transferred to securities companies if proper guidelines were issued.
The DAXA – a crypto exchange group representing South Korea’s largest firms like Upbit, Bithumb, Coinone, Korbit, and Gopax – will be tasked with collecting the necessary feedback from each company through the transaction support division and delivering them to the regulator. The deadline for submission is February 9th.
Unveiling the “Work Plan” for the year, the FSC stressed the need to revamp the regulatory system on “the issuance and distribution of fractional investment items and digital asset securities (security tokens).”
Virtual Currency Tracking System
The Ministry of Justice in South Korea also revealed plans to develop a crypto-tracking system dubbed – Virtual Currency Tracking System – to tackle money laundering initiatives and recover funds linked to criminal activities. The country essentially seeks to monitor transaction history, extract transaction-related data related as well as check the source of funds before and after the remittance.
It is slated to be deployed in the first half of 2023. The development of the tracking and analysis system will start in the second half of the year, according to the South Korean ministry.
The development comes as the Korean police department inked numerous contracts with different domestic exchanges to prevent blockchain crimes. The police department also increased the headcount for blockchain security experts to help strengthen its investigations.
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