Upbit & Other South Korean Exchanges Suffer With New Crypto Law In Effect

Kritika Mehta
July 21, 2024
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South Korea's FSC To Allow Corporate Investments in Crypto Assets

Highlights

  • South Korea's new crypto regulation came into effect on Friday, July 19.
  • Major exchanges in the region took a hit after regulation was implemented.
  • Upbit, South Korea's largest crypto exchange, also suffered a 30% plunge in trading volume.

On July 19, 2024, the Act on the Protection of Virtual Asset Users came into effect in South Korea. The new crypto law aims to create a more secure environment for virtual asset users and establish a sound order in the virtual asset market. However, the immediate impact on trading volumes across major South Korean crypto exchanges, including Upbit, has been significant. These exchanges reported notable declines in their trading volumes.

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Impact On Upbit & Other South Korean CEXs

Upbit, founded in October 2017 by Dunamu, quickly became the largest crypto exchange in South Korea. Moreover, the Upbit exchange has maintained a leading position in the market owing to its user-friendly interface and a wide range of supported cryptocurrencies.

However, in the past 24 hours, Upbit’s trading volume plummeted by 29.4%, dropping to $1.50 billion, according to CoinGecko. Also, this significant decline underscores the market’s initial reaction to the new regulatory environment.

Founded in 2013, Bithumb is one of South Korea’s oldest and most well-known cryptocurrency exchanges. It has consistently ranked among the top 50 exchanges in terms of trading volume and user base. Despite its prominence, Bithumb experienced a 24.7% drop in trading volume, reaching $425.22 million in the past 24 hours.

Coinone, established in 2014, has positioned itself as a major player in the South Korean crypto market. It offers a robust trading platform and various services including staking and lending. Coinone took the hardest hit among the major exchanges, with trading volumes plunging by 38.4% to $23.36 million. Moreover, this steep decline reflects the market’s heightened sensitivity to regulatory changes.

As one of South Korea’s pioneering exchanges, Korbit was founded in 2013 and has been instrumental in driving the adoption of cryptocurrencies in the country. Korbit mirrored the impact on Coinone with a 38.4% to $5.07 million over the past 24 hours.

Also Read: Hong Kong Legislator Questions Transparency of HKMA Stablecoin Sandbox

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Overview Of The New Crypto Regulation

The Act on the Protection of Virtual Asset Users aims to address various gaps in the previous regulatory framework, which primarily focused on anti-money laundering measures. Key provisions of South Korea’s new crypto law include:

1. Protection of Users’ Deposits and Assets: Virtual asset service providers (VASPs) must keep customers’ deposits in safe custody at banks and pay interest on these deposits. Users’ virtual assets must be segregated from the VASPs’ assets.

2. Insurance and Reserve Funds: VASPs are required to insure against liabilities from hacking or network failures or set aside a reserve fund for such contingencies.

3. Regulation of Unfair Trading Activities: The Act mandates surveillance for suspicious transactions. It also requires immediate reporting to South Korea’s Financial Supervisory Service (FSS). Those engaged in unfair trading activities face severe penalties, including criminal punishment or financial penalties.

4. Supervision and Sanctioning Powers: The Financial Services Commission (FSC) and the FSS are granted the authority to supervise, inspect, and sanction VASPs. This includes issuing corrective orders, suspending business operations, and imposing administrative fines.

Moreover, in preparation for the new law, financial authorities and VASPs have been working closely to ensure compliance. The South Korea‘s FSC prepared detailed subordinate statutes, and the FSS offered on-site consultations and a roadmap for VASPs.

Additionally, a pilot test was conducted to assess readiness. The Digital Asset Exchange Alliance (DAXA) and 20 virtual asset exchange service providers also developed best practice guidelines to support self-regulation within the industry.

Also Read: Crypto Titans Bet On Donald Trump’s Win For SEC Shake-Up

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Kritika boasts over 2 years of experience in the financial news sector. Currently working as a crypto journalist at Coingape, she has consistently shown a knack for blockchain technology and cryptocurrencies. Kritika combines insightful analysis with a deep understanding of market trends. With a keen interest in technical analysis, she brings a nuanced perspective to her reporting, exploring the intersection of finance, technology, and emerging trends in the crypto space.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.