FSS issues deadline for crypto companies: Shape up before new regulations hit in July

FSS urges CEOs of digital asset service providers to comply with upcoming virtual asset protection laws. The roadmap requires internal regulation updates by February, bodies for regulation by March, and digital systems by April.

The Financial Supervisory Service (FSS) urged CEOs of digital asset service providers to ensure rigorous adherence to Korea’s upcoming virtual asset investor protection law, scheduled to be enforced by July. FSS Governor Lee Bok-hyun led a meeting in western Seoul with executives from 20 Korean digital asset service providers, emphasizing the importance of compliance with the Act on the Protection of Virtual Asset Users, which was passed into law last July and is set to come into effect in five months.
CEOs representing digital currency, cryptocurrency, and virtual wallet service providers, including Dunamu CEO Lee Sirgoo, participated in the meeting. FSS Governor emphasized the necessity for CEOs to ensure thorough implementation of essential requirements related to organizational structure, systems, and internal controls by the outlined roadmap before the law’s enforcement. He warned of severe consequences for any breaches of the regulations.

The outlined roadmap mandates service providers to establish or amend internal regulations to strengthen self-monitoring and compliance systems by February. They are also required to establish internal bodies for regulatory measures implementation by March and deploy a digital system for transaction recording, monitoring, and detection and reporting of abnormal activities by April.

Under the virtual asset user protection law, service providers are required to safeguard users’ deposits and virtual assets, with banks designated to oversee the management of deposits held by these companies. Additionally, service providers must ensure that a specific percentage of their virtual assets are stored offline.

The policy also introduces strict penalties for illegal trading activities, stipulating a minimum prison sentence of one year or fines ranging from three to five times the amount of illicit gains for offenders. Individuals involved in trades resulting in illegal gains exceeding 5 billion won ($3.8 million) could face a life sentence.