Korean Financial Supervisory Service Meet With Five Leading Crypto Exchanges

Updated: 21 June 2023

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The Korean Financial Supervisory Service (FSS) has scheduled a non-public meeting with five cryptocurrency exchanges, including Bithumb, Gopax, Coinone, Upbit, the Digital Asset eXchange Association (DAXA), and Korbit.

According to Etoday, the secret meeting between the Korean Financial Supervisory Service and DAXA, as well as the crypto exchanges, took place as they discussed the details for establishing the securities ability of particular virtual assets.

🔴South Korea’s National Police Agency plans to enable a system with real-time wallet address monitoring and freeze funds functions. The police agency to hold a meeting with Binance and South Korea’s top 5 crypto exchange to discuss these plans.#Binance #SouthKorea #Crypto #btc pic.twitter.com/JlMKGRjttX

— Nft Finder 💧 (@NftFinnder) May 30, 2023

In attendance at the meeting were three in-house attorneys:

the corporate disclosure bureau,
the working level, and
a legal representative for each exchange.

When examining virtual asset securities, the FSS intends to issue cautionary notes and demonstrate virtual asset exchanges that have evaluated securities independently, such as Upbit and Korbit.

The FSS plans to assess and debate the standards for attributing securities to profit and loss at the meeting.

To consider virtual assets secure, the assets must go beyond reasonable expectations of investor gains and contractual rights to collect profits and losses as a result of the joint venture.

Korean Financial Supervisory Service Specific Task Force

On February 23, the FSS established a task force to evaluate the security of virtual assets. Initially, it was policy to cite examples from other countries, such as the U.S. Securities and Exchange Commission (SEC).

A previous announcement in March mentioned that South Korea’s STO-related law changes would be present in the first half of this year. It also stated that the laws will be implemented by the end of 2024.

On discovery that a digital asset currently traded on a virtual asset exchange is a security, the issuer will be sanctioned for violating the Capital Markets Act. Terra and Luna, according to authorities, are investment contract securities, and individuals associated with them have been charged with violating the Capital Markets Act.

News: South Korea issues arrest warrant for Terra Luna Founder Do Kwon. $LUNA $UST

— David Gokhshtein 🎙️ (@davidgokhshtein) September 14, 2022

The Capital Markets Act intends to improve Korean capital market regulation by consolidating various statutes used to govern the financial industry by type and improving their regulation and supervision.

The new Act established a system capable of regulating all financial investment products traded in capital markets and regulations categorizing financial investment services, financial investment products, and investors based on functions.

The new legislation broadened financial investment service companies’ business scope while strengthening investor protection mechanisms. It strengthened market integrity structures by reinforcing regulations against illegal transactions. It also enacted new rules governing cross-border capital market transactions and business activities.

Additionally, addressing the recent Korean controversies on spot-futures manipulation, the updated bill expands price manipulation regulations to include unlisted securities (such as equity linked notes) and OTC derivatives, making them punishable by law. Furthermore, it aims to regulate the use of undisclosed information concerning backdoor listings, mergers of special purpose acquisition companies, and related matters.