South Korea’s Financial Services Commission (FSC) is considering a requirement that digital asset exchanges offset investor losses and pay penalties for the sudden suspension of withdrawal services, Yonhap news agency reported Monday.
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Fast facts
- The country’s top financial regulator FSC gave preliminary consent to such a proposal made in ruling Conservative Party lawmaker Yoon Chang-hyun’s bill on establishing a fair and safe trading environment for digital assets.
- The proposal also included mandating exchanges to separate user deposits from their operational funds, and requiring the platforms to establish a register of users’ digital asset properties.
- Crypto exchanges will also be insured for compensating unexpected events such as hacks or system error, and limiting exchanges from brokering self-issued exchange tokens, which have a higher risk of being utilized for unfair trade practices, according to Yonhap.
- The proposal aims to incriminate digital asset service providers in case of misconduct, which may result in further law enforcement investigations or penalties. It also plans to give FSC officials the authority to interrogate, seize or search such businesses.
- Local crypto exchange GOPAX halted withdrawals in its savings product GOFi from Nov. 17, stating that the suspension was prompted by partner crypto lender Genesis Global Capital that announced withdrawal suspension on Nov. 16 following the collapse of FTX.
- Upbit, South Korea’s largest crypto exchange also halted deposit and withdrawal services for eight hours last week as a result of a system error at its partner K-Bank, which provides fiat banking services to Upbit users.
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