Crypto exchange platforms in South Korea have been instructed by relevant authorities to maintain reserves with Korean banks. This pertains to the intention of the government to protect those who are venturing out on the path to build a portfolio with digital tokens. Per the instructions, crypto exchange platforms are required to maintain a reserve of $2.3 million right from the next month, that is, September 2023. This translates to 3 billion won.
Most of the portion of the crypto-related legal document goes live in January 2024. Accumulation of reserves is an exception since the aim is to protect the interests of customers. Ventures that are under the radar include Upbit and Bithumb. They have acknowledged the receipt of these instructions and vowed to comply with them in the next couple of days.
Reserves will have to be maintained with the Korean banks as the Korean government steps up its game to back the industry and its members. Guidelines have been titled Virtual Asset Real-Name Account Operation Guidelines. It alternatively gives them an option of maintaining 30% of the daily deposit in reserves. The actual amount will be the one that is higher. The objective is to create a reservoir for the times when there is damage due to unforeseen circumstances.
The size of the funds has been capped to 20 billion won. There are a total of 19 bills that talk about cryptocurrency or matters related to the digital token. One of the key matters includes the Bank of Korea and Financial Service Commission attaining the power to oversee the functions of crypto operators. That’s not it since the authority extends to oversee the functions of asset custodians. Assuming any operator or custodian fails to comply with the laws, the Bank of Korea and FSC will have the power to impose penalties on them, especially if any case of unfair trading comes to light.
Nations across the world are looking to gain the tag of a global hub for crypto and Web3. South Korea is no different. The fact that the country is moving ahead with a huge emphasis on protecting the interest of customers makes it stand out from the crowd. During a time when everyone is racing to cross the finish line first, South Korea is making sure that crypto ventures like Upbit and Bithumb stand true to the nature of actual ways of trading.
Furthermore, domestic companies are required to disclose their holdings of cryptocurrencies effective next year. As for the crypto ventures, they will have to add another layer of authentication of collection transfers with an enhanced version of the KYC mechanism.
It is only the reserve accumulation aspect that is going live effective September 2023. The major portion of the guidelines will come into force from January 2024. Crypto ventures remain committed to complying with the guidelines as stated by authorities.