In a bold move aimed at bolstering the security and stability of its crypto market, South Korean authorities have unveiled a groundbreaking requirement for crypto exchanges to build substantial financial cushions. According to a local media report, the rule mandates that exchanges obtain accounts from banks must establish a minimum reserve of $2.28 million and a maximum of $1,520, effective from September this year.
New Guidelines Aim To Bolster Crypto Security
The directive, shared by the Korea Federation of Banks, seeks to address the potential for severe losses in the event of hacking or technical glitches, which have historically plagued the crypto industry. Exchanges dealing in South Korean won (KRW) have reportedly adapted swiftly, ensuring compliance by the approaching deadline.
However, the situation differs in the coin market exchanges, which primarily facilitate coin-to-coin transactions. Many of these exchanges are grappling with capital deficits and are struggling to accumulate the mandated reserves. Negotiations between these exchanges and banks on issuing real-name accounts are at risk of derailment due to the non-fulfillment of banking sector standards.
The new standards dictate that exchanges issued with real-name accounts must amass reserves ranging from 3 billion to 20 billion KRW, depending on their daily average deposits. This reserve serves as a security measure to indemnify users against potential accidents within the cryptocurrency sphere.
The move, which arrives amidst heightened regulatory scrutiny globally, aims to bring a semblance of order to the often turbulent world of cryptocurrencies. Enhanced customer authentication and additional authentication for fund transfers are also part of the regulatory package, set to take effect in January 2024.
While this stringent guideline has been met with a mixed response, the majority of established won market exchanges are already prepared to meet the requirements. Industry giants like Upbit and Bithumb have welcomed the move, pledging adherence to the newly introduced rules.
The verdict is still out on whether the new measures will indeed lead to a more resilient crypto market in South Korea. Only time will tell whether the ambitious initiative will effectively safeguard users and instill greater confidence in the world of digital assets. Nevertheless, as the September deadline draws closer, the cryptocurrency landscape in South Korea is poised for a significant transformation.
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