South Korea’s FSS Launches On-Site Inspections of Crypto Exchanges

South Korea’s FSS Initiates On-Site Inspections of Crypto Exchanges to Ensure Compliance

To ensure compliance with the Virtual Asset User Protection Act, South Korea’s Financial Supervisory Service (FSS) has initiated on-site inspections of crypto asset exchanges, starting with Bithumb. This is a significant step towards more regulation of the country’s growing cryptocurrency market, as the FSS seeks to protect users and prevent illegal activities.

The Virtual Asset User Protection Act, which was created to promote transparency and security in the crypto space, mandates that Virtual Assistant Service Providers (VASPs) implement stricter anti-money laundering (AML) and know-your-customer (KYC) measures. Starting after the Chuseok holiday, the FSS will conduct inspections to evaluate whether Bithumb adheres strictly to these rules, including how customer funds are protected, whether transparent trading is conducted, and if any system is in place to ensure customer protection.

The same process applies to both enforcement actions and those related to market manipulation, insider trading, or other illegal activities that endanger the integrity of the market. This comprehensive approach is designed to ensure the safety and reliability of cryptocurrency users in South Korea.

The FSS has also been investigating other major crypto exchanges, such as Upbit, under the new regulations. The extensive examination demonstrates the South Korean government’s dedication to upholding strict compliance and security standards for cryptocurrency exchanges.

Read more about South Korea’s Virtual Asset User Protection Act and its implications on the crypto industry: [“South Korea’s Virtual Asset User Protection Act: A Step Towards Regulatory Clarity”](https://www.coinseeks.com/south-koreas-virtual-asset-user-protection-act-a-step-towards-regulatory-clarity/)

The government’s move to regulate VASPs is aimed at preventing the misuse of cryptocurrencies for illegal purposes, such as money laundering and terrorist financing. Over the past few years, South Korea has become a prominent destination for cryptocurrency trading, with popular exchanges like Bithumb and Upbit operating within the country. However, the lack of stringent regulations had raised concerns about the security and integrity of these exchanged platforms.

The on-site inspections are a significant first step towards responding to these issues and creating ‘conforming compliance’ within the industry, and as well as contributing to strengthening the trust of users and investors in South Korea’s cryptocurrency market.

The FSS’s efforts to ensure transparent and secure exchange operations can help prevent the frequent breaches and hacking that have been common in the past. The FSS’s compliance with the Virtual Asset User Protection Act is crucial in ensuring that cryptocurrency users in South Korea are safer, more secure, and more reliable.

As the regulatory environment changes, it is imperative for exchanges and other stakeholders to prioritize compliance and transparency, which can contribute to sustainable growth of the cryptocurrency industry in the country.