South Korea is set to launch a new transaction monitoring system for Bitcoin trading, as announced by the Financial Supervisory Service (FSS), the country’s financial regulator. The integration of this system with the crypto exchanges in South Korea will go live on July 19, coinciding with the enforcement of the Virtual Asset User Protection Act.
This new system will enable the FSS to identify suspicious and illicit activities associated with almost all crypto transactions carried out on domestic exchanges, covering approximately 29 exchanges. Any questionable transactions will be promptly reported to the FSS for further action.
Major exchanges such as Coinone, Bithumb, Korbit, and Upbit have committed to complying with the monitoring system integration and the broader regulations outlined in the Virtual Asset User Protection Act. Transactions involving money laundering and market manipulation will be flagged for regulatory intervention.
In a translated statement from the regulator’s press release, it was mentioned that the Virtual Asset User Protection Act aims to prevent unfair trade practices in the virtual asset market and mandates exchanges to monitor abnormal transactions continuously. The FSS, in collaboration with exchanges, has developed guidelines for ongoing monitoring of e-commerce to ensure compliance with legal obligations and facilitate the smooth operation of the monitoring system.
The need for such regulatory measures was underscored by the collapse of Terraform Labs, which led to significant financial losses for investors and the bankruptcy of several entities. The founder of Terraform Labs, Do Kwon, a South Korean national, was sentenced to four years in Montenegro. While the company was licensed in South Korea, its primary operations were based in Singapore.
The South Korean government has described the collapse of Terraform Labs as the most extensive financial fraud in the country’s history. The enforcement of the new transaction monitoring system and the Virtual Asset User Protection Act reflects the government’s commitment to strengthening oversight and ensuring the integrity of the crypto market in South Korea.