On Wednesday, the South Korean financial regulator announced that domestic cryptocurrency investors would be protected under the revised law. According to The Korea Herald, the Financial Services Commission (FSC) clarified that only assets held in registered crypto exchanges would be ‘naturally protected’ by the ruling.
Eun Sung-soo, Chairman of the FSC, told reporters during a speech at 2021 Korea Fintech Week in Seoul that withdrawals performed through such digital asset exchanges registered adequately before the watchdog would be under the supervision of the amended “Act on Reporting and Using Specified Financial Transaction Information.”
“Only crypto exchanges that have adopted real-name bank accounts and granted Information Security Management System certification from the Korea Internet & Security Agency will qualify for the application,” Sung-soo commented.
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Furthermore, he urged domestic investors to deal with crypto companies that abide by the new set of rules, warning that the FSC could shut down these firms if they do not comply successfully. “The 200 crypto exchanges here could all shut down if they are not registered by September,” the FSC’s Chairman said during a meeting held at South Korea’s National Assembly last month.
FSC Cannot Protect Users from Market’s Volatility
But, the head of the country’s top financial regulator also pointed out that his office cannot protect consumers on the volatile nature of the cryptocurrency markets. “What I want to make clear is that cryptocurrency volatility is not a subject of our protection,” Eun said. Additionally, he added that crypto-related crimes such as frauds or scams are only handled by the police, not the financial watchdog.
As the South Korean crypto exchanges are to file for regulatory approval by September 25, 2021, the FSC has been reportedly summoning major domestic banks to provide further information on the status of their deals with such cryptocurrency firms. The revised act asks all exchanges to maintain banking accounts under each customer’s name registered on the platform.