South Korea to tighten crypto exchange oversight with new monitoring system

South Korea’s Financial Supervisory Service (FSS) plans to tighten oversight of crypto trading platforms under its jurisdiction to eliminate fraudulent transactions.

In a July 4 notice, the regulator announced that local exchanges must establish a “continuous monitoring system for unfair transactions” and report “abnormal transactions” via a dedicated transmission line.

According to the notice:

“To ensure that virtual asset exchanges can smoothly fulfill their legal obligations, the Financial Supervisory Service has jointly prepared the ‘Abnormal Transaction Monitoring Guidelines’ with exchanges and supported the establishment and operation of a regular abnormal transaction surveillance system.”

The new system will go live on July 19, coinciding with the implementation of South Korea’s first regulatory framework for crypto investor protection, the Virtual Asset User Protection Act.

Mass token delisting unlikely

In a parallel development, the Digital Asset Exchange Alliance (DAXA) and 20 local exchanges have addressed fears of a possible token mass delisting with the “Best Practices for Supporting Digital Asset Transactions” guideline.

In their July 2 statement, DAXA stated that the guideline provides a framework for exchanges to review and delist digital assets. The guideline would allow a more lenient review plan for assets that have traded for over two years in “eligible overseas virtual asset markets with sufficient regulation.”

Earlier reports suggested that South Korean exchanges would review the listing of over 1,000 altcoins in the next six months to ensure regulatory compliance. This raised concerns within the crypto community about potential mass delistings of as many as 600 coins.

Meanwhile, these regulatory moves further reflect South Korea’s proactive approach to crypto regulation. The Asian country aims to set high standards for exchange operations and consumer protection, positioning it as a leader in managing the crypto industry’s challenges.

Market observers noted that the regulatory changes will enhance market stability, protect investors, and deter financial crimes in the crypto sector.