South Korea’s financial regulator is introducing a novel surveillance system for detecting illicit activities in cryptocurrency, coinciding with the imminent implementation of its inaugural law safeguarding digital asset users.
According to a recent announcement by the Financial Supervisory Service (FSS), the agency has collaborated with domestic cryptocurrency exchanges to establish a 24/7 monitoring mechanism aimed at identifying suspicious transactions within the cryptocurrency sphere.
This system is slated to go live concurrently with the enforcement of the Virtual Asset User Protection Act on July 19th. The legislation is designed to outlaw market manipulation in cryptocurrencies, specific forms of trading activities, and the use of undisclosed material information related to digital assets.
Under the new law, offenders could face severe penalties, including life imprisonment for illicit gains exceeding $5 billion Korean won (approximately $3.76 million USD), as well as fines ranging from three to five times the illicitly obtained amount.
In an effort to facilitate compliance among cryptocurrency exchanges with their regulatory obligations, the FSS is initiating the rollout of this monitoring infrastructure.
“With the enactment of the Virtual Asset User Protection Act, unfair trading practices within the virtual asset market are prohibited, and virtual asset exchanges are mandated to maintain records of abnormal transactions,” stated a spokesperson from the FSS.
South Korea, Asia’s fourth-largest economy, is adopting this legislation in the aftermath of the $40 billion collapse of Terraform Labs in 2022, a crypto ecosystem co-founded by South Korean national Do Kwon.
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