South Korea’s new crypto law (VAUPA) requires financial institutions like exchanges to keep users’ digital assets separate from their own.
South Korea’s new law, VAUPA, started on July 19. It requires virtual asset service providers to protect customer money and follow national rules.
On July 18, 2023, the Virtual Asset User Protection Act was passed, mandating that financial institutions comply with its regulations. These institutions were granted a period to implement the necessary measures. However, enforcement of the law commenced in the latter part of the week.
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This legislation prioritizes safeguarding user assets, curbing fraudulent trading practices, and empowering financial authorities to scrutinize entities involved in virtual assets.
Specifically, the South Korean government mandates the securekeeping of client funds in banks and the applicable charges. Any transactions deemed suspicious are to be reported promptly.
“The Financial Services Commission anticipates that the enactment of the Virtual Asset User Protection Act will lay the groundwork for ensuring user safety. With the potential for imposing harsh penalties on those involved in fraudulent trading, it is also expected to foster stability within the virtual asset market,” stated a press release from the Financial Services Commission.
Nonetheless, the South Korean regulatory body cautioned that the law does not ensure the protection of user’s virtual assets. It urged caution in all financial dealings.
South Korea boasts a thriving cryptocurrency market and a robust investor community.
Traders globally also utilize Korean cryptocurrency exchanges to take advantage of their slightly higher asset values at certain times, referred to as the “Kimchi Premium.”
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