coinspress.com
The Financial Services Commission (FSC) of South Korea has taken decisive steps by introducing comprehensive regulations, set to be enforced starting July 19, 2024.
The primary objective is bolstering security measures and ensuring stability within the realm of virtual assets. These regulations, forming part of the broader framework known as the Virtual Asset User Protection Act, encompass a range of targeted strategies aimed at safeguarding users and fostering a more secure environment within the virtual asset market.
Among the key provisions, a significant focus lies on the segregation of user deposits from proprietary assets. Notably, the regulations designate banks as entrusted institutions responsible for managing these segregated assets, enhancing trust and bolstering financial stability.
Moreover, a notable security measure requires that over 80% of users’ assets must be securely stored in cold wallets, significantly increasing protection against cyber threats like scams and hacking attempts.
In anticipation of potential crises, the regulations mandate virtual asset operators to acquire insurance coverage or maintain reserves. This proactive approach ensures preparedness and accountability, mitigating risks associated with incidents such as hacking or system failures.
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Transparency is also paramount, as the regulations stress the importance of clear disclosure practices while strictly prohibiting unjustifiable blocking of deposits or withdrawals. These measures are designed to empower users and prevent unwarranted disruptions in their transactions.
Furthermore, the regulations underscore the importance of vigilant oversight by imposing responsibilities on virtual asset exchanges to diligently monitor transactions. They necessitate swift reporting to regulatory bodies in cases of suspected unfair trade practices, highlighting a commitment to maintaining market integrity and ensuring the protection of users’ interests.