The Financial Supervisory Service (FSS) is working on a new system that will detect any unusual crypto trading activity. This system aims to increase transparency and control in the market with the “Virtual Asset User Protection Law”, which will come into force on July 19, 2024.

In its statement dated July 4, FSS called on domestic cryptocurrency exchanges and asked them to share internal data that will be integrated into the new system. This data is critical to ensuring a harmonious environment in the crypto market and ensuring compliance with the new law.

The new system will specifically track transactions outside normal trading volume and price ranges, unusually high volume transactions, and transactions executed with a delay. These situations may indicate market manipulation or illegal activity.

These criteria set by the FSS can be especially problematic for so-called “altcoins”, which are less well-known and less regulated than established cryptocurrencies. This tighter oversight could create “significant challenges for altcoins that fail to quickly meet regulatory standards,” Matt Younghoon Mok, senior foreign attorney at Lee & Ko law firm in Seoul, told Bloomberg.

These new regulations aim to make the cryptocurrency market in South Korea safer and more stable. At the same time, important steps are being taken to protect the rights of crypto investors. As previously reported by crypto.news, South Korean cryptocurrency exchanges will re-evaluate more than 1,000 tokens they currently list with the implementation of the Virtual Asset User Protection Act. This evaluation process will take into account factors such as the reliability of each token, the measures taken to protect users, the technology used and security standards, as well as regulatory compliance.

Despite this comprehensive review of exchanges, the Digital Asset Exchange Alliance, which represents five major Korean exchanges, predicts that “mass delisting” will be minimal in the next six months. Behind this optimistic forecast lies the fact that domestic platforms are already proactively taking measures to ensure regulatory compliance.

The new regulations are expected to apply to approximately thirty registered cryptocurrency exchanges, including Upbit, Bithumb, Coinone, Korbit and Gopax. These exchanges will conduct separate reviews for each token and decide whether the token in question will remain on their platforms or whether it will be delisted.

Along with the trade tracking system developed by FSS, cryptocurrency exchanges will also have to establish a review committee under the new regulatory framework. In addition to the criteria mentioned above, this committee will closely examine the reliability of the token issuer, user protection measures, technology and security standards, and regulatory compliance. This comprehensive review process will increase not only transparency but also reliability in the South Korean cryptocurrency market.

The South Korean government is taking important steps to closely monitor the cryptocurrency market and protect investors. The new trade tracking system and strict control practices will strengthen the environment of trust in the market and allow investors to make informed decisions.