Cryptocurrency exchanges in South Korea are scrambling to implement new monitoring systems as a set of new stringent rules come into effect this Friday. South Korea’s Virtual Asset User Protection Act (VAUPA) introduces tighter laws expected to bring fairness in the sector.
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The new law tracks and traces cryptocurrency transactions as well as the prevention of unfair trading practices especially price manipulation, fraudulent transactions, and insider information.
New law to combat crypto market manipulation in South Korea
Under the new regulations, which come into effect this Friday, crypto exchanges are mandated to establish robust monitoring systems to fish out any suspicious activities and report them to regulatory authorities.
According to Finance Magnates, one of the biggest crypto exchanges in the country Upbit’s operator Dunamu, ranks among the first crypto platforms to be proactive and develop “a new unfair trading monitoring system ahead of the law’s implementation.”
The system reportedly builds on the already existing monitoring infrastructure. It also incorporates order book information as well as advanced data analysis tools.
“With the enactment of the VAUPA, it will become even more crucial for exchanges to prove their compliance,” revealed a Dunamu official in a comment for Korea Times.
“We will further improve our monitoring system of unfair trading to offer a safe environment for virtual asset investors,” added the official.
According to Financial Magnates, industry players have also emphasized the importance of “order book information loading system,” which is a crucial aspect of the new monitoring requirements under the VAUPA.
This is also important for regulators to determine cases of unfair trading. In line with this, exchanges are required to keep detailed trading records including order book information.
VAUPA is expected to enhance transparency in the sector
In February this year, the Financial Services Commission (FSC) enacted VAUPA, a set of regulations which defines digital assets as well as outlines potential punishments for illegal operations.
The Act comes into effect this week as it marks a significant step in South Korea’s attempts to regulate the crypto sector. The legislation, which was first introduced last year seeks to nip in the bud crypto-related crimes while enhancing transparency in the cryptocurrency industry.
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One of the factors that pushed the country into coming up with VAUPA originated from the “upheaval” involving Terraform Labs and its founder Do Kwon. Terraform Labs’ collapse in 2022 resulted in billions of dollars market losses, prompting South Korean authorities to act and cover the gaps.
South Korea is one of the world’s largest markets for digital assets. And, as the July 19th fast approaches, exchanges are expected to start implementing the monitoring systems in line with the new regulation.
Stakeholders in the crypto industry in the country have also announced self-regulatory standards that will be implemented on July 19.
The Digital Asset Exchange Association, comprised of 20 crypto exchanges, said it would reevaluate over 1,300 alternative token listings by the end of this year.