Seoul – The South Korean government recently announced strengthened regulatory measures for the cryptocurrency industry, aiming to clear obstacles for traditional financial institutions to enter the crypto market in compliance while preventing potential financial risks.
According to the policy statement released by the Financial Services Commission of South Korea, the new regulations require cryptocurrency exchanges to complete the Information Security Management System (ISMS) certification and introduce a “cold and hot wallet separation storage” mechanism to ensure the security of user assets. In addition, exchanges need to implement stricter identity verification and source review of funds for transactions exceeding a certain scale to combat illegal activities such as money laundering.
South Korea’s financial regulatory authorities said that this policy adjustment was in response to the growing demand from domestic institutional investors. In recent years, many South Korean banks and securities companies have publicly expressed their interest in cryptocurrency custody and trading services. The regulatory authorities hope to attract traditional financial institutions to participate in an orderly manner and promote the professional development of the crypto market by establishing more transparent market rules.
Analysis indicates that as a globally active market for cryptocurrency trading, South Korea has long had a relatively high proportion of retail investors. While the new regulations raise the industry threshold, they may accelerate the exit of small and medium-sized exchanges from the market and prompt market share to concentrate on leading platforms. However, strict regulatory measures may also restrain the development of some innovative businesses. How to balance risk prevention and control with industry vitality has become a challenge for the regulatory authorities.
At present, the Financial Services Commission of South Korea has initiated the legislative coordination process with the National Assembly, and the relevant detailed rules are expected to be officially implemented within this year. This move is regarded as an important step for South Korea to standardize its cryptocurrency market and also provides a regulatory framework reference for other Asian countries.
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