As part of enhanced consumer protection, South Korean cryptocurrency exchanges will be required to keep at least $2.3 million (3 billion won) in reserves in bank accounts. Media reports said these requirements were outlined in July guidelines issued by the Korea Federation of Banks.
The Korean banking association asked the locally registered crypto exchanges to set aside a minimum of 3 billion won or 30% of average daily deposits in reserves to “fulfill their liability for damages to users” in the case of a risk event. However, the banking association has capped the reserves at 20 billion won.
In June, South Korea passed 19 crypto-related bills as part of legislation to regulate the cryptocurrency market better and protect investors. The new legislation authorized the Bank of Korea and Financial Services Commission to oversee crypto firms and asset custodians. They can also penalize crypto businesses if they indulge in unfair trade practices.
Beginning next year, domestic companies must disclose their crypto holdings as part of revamped accounting rules. Similarly, crypto companies must disclose information, including business models, token details, internal accounting practices, etc.
South Korea began getting tough with crypto regulation after the collapse of Terraform Labs’ terraLuna stablecoin, which left thousands of investors lost their money permanently. Terraform Labs’ co-founder and CEO Do Kwon was held in Montenegro in March. He is currently serving a four-month prison in Montenegro for travelling on a forged document.
