South Korean government unveils real-time monitoring for crypto fraud
Quick Take South Korea’s financial watchdog announced today that it has prepared a 24-hour monitoring system for dubious activity in the crypto market. South Korea’s first comprehensive crypto law is coming into effect later this month.
South Korea’s Financial Supervisory Service announced today that it has developed a 24-hour surveillance system with local exchanges that will screen for any suspicious activity in the cryptocurrency market.
The new system is set to go live on July 19, the day South Korea’s first regulatory framework for crypto investor protection comes into effect, FSS said in the press release .
From January to May this year, the FSS said it prepared a standardized reporting format for transaction data submissions from local exchanges, upon which it built a system that separates irregular transactions from the rest.
“We benchmarked KRX's (Korea Exchange) criteria in extracting abnormal transactions and prepared models and metric indicators through several simulations, which we expect will filter out abnormal transactions meticulously,” FSS said.
The agency added that major local exchanges, which process 99.9% of South Korea’s crypto trades, have already built the monitoring system based on its latest criteria.
FSS also advised exchanges to form a dedicated team within the organization to monitor dubious transactions, and provided guidelines on uncovering illegalities in the detected transactions through auditing information, such as onchain data. Illegal activities in crypto include the use of a token’s undisclosed information for unfair trading, price manipulation and forging circulation data, the agency noted.
South Korean exchanges have readied a hotline with the FSS to report transactions that they believe to be in violation of local regulations.
New law incoming
South Korea’s inaugural crypto law — the Virtual Asset User Protection Act — will go into full effect on July 19.
It aims to eradicate illicit market acts, such as using undisclosed information for crypto investments, manipulating market prices and engaging in fraudulent transactions. It also requires crypto service providers to safeguard over 80% of deposits in cold storage to protect user funds and enroll in insurance programs for potential user compensation in the event of security breaches.
The country’s lawmakers are currently developing a follow-up legislation for the user protection act, where topics such as stablecoin regulation and allowing institutional trading of crypto are being discussed.
South Korean exchanges and their representative body announced earlier this week that they have established a new code of conduct for local firms, which entails a re-evaluation of 1,333 cryptocurrencies being traded domestically.
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