Korea’s regulator has developed a system to monitor crypto transactions

It will be launched on the same day the crypto investor protection act comes into effect

04.07.2024 - 14:20

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What’s new? South Korea’s Financial Supervisory Service (FSS) has developed a real-time monitoring system for local crypto exchanges that will track any suspicious activity, particularly fraud, in the digital asset market. It will be launched on July 19, the same time the crypto investor protection act comes into effect.

Press release

What else is known? From January to May this year, the FSS was developing a standardized format for crypto exchanges to report transactions, based on which the system was built to distinguish unusual transactions among many others.

The regulator also relied on the Korea Stock Exchange’s (KRX) criteria, which it uses to identify anomalous transactions, and prepared a number of its own metrics.

According to officials, major local crypto exchanges, which account for 99,9% of digital asset transactions in the country, have already implemented their own monitoring systems based on the agency’s standards.

The FSS also advised the exchanges to form suspicious transaction monitoring departments by providing them with on-chain analysis methods. In addition, local exchanges have launched a hotline to report transactions that potentially violate local laws.

South Korea recovered $4,6 million in undeclared taxes thanks to a digital crypto tracking system

The system was used to detect the crypto accounts of 5910 citizens, each of whom owed more than 3 million Korean won (~$2200) in taxes

South Korea’s first cryptocurrency law, the Virtual Asset User Protection Act, will take effect on July 19. The document passed in February, will toughen penalties for fraud, market manipulation, and insider trading. If the amount of damage exceeds 5 billion Korean won, violators will face life imprisonment.

The law will also require crypto service providers to keep more than 80% of users’ deposits in cold storage and participate in insurance programs, so users can be compensated in case of hacking.

South Korea’s number of suspicious crypto transactions increased by 49% in 2023

Last year, there were 16 076 crypto transactions suspected of being involved in illegal activities

Lawmakers are now also drafting laws to regulate stablecoins and institutional cryptocurrency trading.

In February, the local financial intelligence agency planned to inspect crypto exchanges for licenses as part of an increased crackdown on money laundering.

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