September 08, 2024

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A screen shows bitcoin trading at over 90 million won at local crypto exchange Upbit's headquarters in southern Seoul, Tuesday. (Yonhap)

Local cryptocurrency exchange operators are ramping up their regulatory measures as the introduction of the virtual asset user protection law nears in South Korea.

On Tuesday, the Digital Asset Exchange Alliance, a body of five top local crypto exchange operators, introduced a guideline that advises exchanges to monitor abnormal transactions. It further released a revision of the guideline on the internal control standards of the exchange operators.

The movement comes as the Act on the Protection of Virtual Asset Users is to be enacted in Korea on Friday, requiring virtual asset service providers here to keep guard against abnormal transactions, including unusual fluctuations in the prices or trading volumes of listed coins. They are required to report the cases to financial regulators and take measures to protect users.

In line with the efforts, Bithumb Korea, operator of the country's No. 2 cryptocurrency exchange, said Tuesday it had launched a monitoring committee the previous day, to keep guard against market disturbance. The committee is headed by CEO Lee Jae-won.

“The committee will be operated year-round to respond to abnormal transactions and unfair trade practices,” said Jang Doo-sik, head of the market oversight division at the company.

“Bithumb will work to keep a closer and more systematic watch on the market,” Jang said.

With the establishment, Bithumb Korea has a total of five committees, also watching over its compliance, supervising user protection, ensuring prevention of money laundering and internal control.

Earlier this month, the operator also introduced a reward to encourage individuals to report on employees' engagement in unfair trading practices. The reward goes up to 300 million won ($220,000).

Dunamu, operator of Korea's largest cryptocurrency exchange Upbit, has also been working on strengthening its control system in recent months. In the first half of this year, it started to operate a system that keeps a record of asking prices of trading.

“Under the new law, exchanges have to keep account of asking prices, along with other details of the orders such as the date and time. Upbit was the first to operate the track system among local exchanges, even before the enactment of the user protection law,” an official from Dunamu said.

Along with the implementation of monitoring systems under the new law, tighter regulations will be imposed on the local virtual asset market from Friday.

As part of the movement, local exchanges are to reexamine the listing of some 600 coins traded here. The exchanges are to screen listed coins for six months from Friday, to drop coins that lack credibility, with insufficient information on issuance and distribution volume. After the six-month period, the exchanges are to conduct the screening every three months.

By Im Eun-byel (silverstar@heraldcorp.com)