South Korea’s financial watchdog, the FSS, is ramping up its crypto regulations with a new “continuous monitoring system” launching July 19th.

This system, developed alongside domestic exchanges, aims to combat market manipulation and illegal trading practices.

The system will work by constantly analyzing cryptocurrency transactions on exchanges, covering a staggering 99.9% of the country’s trading volume.

This allows authorities to identify and report suspicious activity in real-time.

Exchanges will also be required to establish dedicated teams to monitor transactions for red flags like unfair trading based on insider information, price manipulation, and fabricated trading data.

Once identified, these suspicious transactions will be reported directly to the FSS through a secure channel.

This initiative aligns with the recently passed Virtual Asset User Protection Act, which prioritizes investor protection and fair trade practices.

The FSS has spent months developing the system, referencing existing stock market monitoring practices and conducting simulations to ensure accurate detection of irregular activities.

South Korea’s Crypto Landscape Faces Stricter Oversight

The new regulations impact all 29 registered cryptocurrency exchanges in the country, including major players like Upbit and Bithumb.

These exchanges will not only face transaction monitoring but also stricter guidelines for listing new cryptocurrencies, promoting a more secure and legitimate market.

Furthermore, the law mandates that exchanges store over 80% of user deposits in secure offline storage (cold wallets) and participate in insurance programs to compensate users in case of security breaches.

South Korea’s regulatory push doesn’t stop there. Lawmakers are already working on follow-up legislation to address stablecoin regulation and open the door for institutional crypto trading.

Additionally, domestic exchanges recently established a new code of conduct, which includes reviewing all currently traded cryptocurrencies for compliance with the new regulatory landscape.

These measures paint a clear picture: South Korea is taking a proactive approach to regulate its cryptocurrency market,prioritizing investor protection and market stability.