South Korean cryptocurrency exchanges are set to bolster their financial security with a new regulatory requirement. Starting from September, these exchanges will be obliged to maintain minimum reserves of 3 billion won, equivalent to $2.3 million, in their bank accounts.
This move comes as part of South Korea’s efforts to enhance consumer protection measures within the rapidly expanding cryptocurrency sector.
Leading exchanges in the country, including giants like Upbit and Bithumb, are actively adapting their operations to adhere to the fresh guidelines established by the Korean Banks Federation.
These guidelines, officially titled “Virtual Asset Real Name Account Operating Guidelines,” were unveiled in July. They outline that crypto exchanges must maintain reserves equal to a minimum of 30% of their average daily deposits, with an upper limit set at 20 billion won.
The primary goal of this regulatory measure is to ensure that these exchanges remain financially robust and capable of meeting their obligations to users, especially in the face of potential risks or losses.
These regulatory changes are driven by South Korea’s commitment to safeguarding crypto investors and promoting transparency in the industry. In June, the country passed comprehensive legislation comprising 19 crypto-related bills.
This legislation empowered key institutions such as the Financial Services Commission (FSC) and the Bank of Korea with regulatory authority over crypto operators and asset custodians. Importantly, these entities now have the ability to penalize any unfair trading practices related to virtual assets.
These new measures reflect South Korea’s determination to nurture a healthy and responsible cryptocurrency ecosystem while simultaneously safeguarding the interests of investors and market participants.
By compelling exchanges to hold substantial reserves, the government is taking proactive steps to fortify the sector against potential financial instability, ultimately aiming to create a safer environment for all stakeholders.
This regulatory evolution underscores South Korea’s recognition of the growing significance of cryptocurrencies and its commitment to ensuring the industry operates with integrity and accountability.