South Korea has just implemented the Virtual Asset User Protection Act, which is is the country’s first comprehensive regulatory framework for cryptocurrencies, with a focus on safeguarding investors.
The legislation was officially approved on July 18, 2024 and includes a one-year grace period for finalizing regulatory details.
Under the new law, digital asset exchanges in South Korea are subject to stricter requirements, such as keeping at least 80% of user deposits in cold wallets to ensure separation from the exchange’s own assets.
Additionally, exchanges are required to entrust user cash deposits to licensed local banks and maintain cryptocurrency reserves equivalent to the quantity and type of customer deposits.
To address potential hacking incidents or liquidity crises, crypto services must purchase insurance or establish reserve funds.
