South Korea Begins Drafting Second Phase of Crypto Regulations

South Korea has officially commenced discussions to develop the second phase of its crypto regulatory framework, aiming to finalize the legislation within the second half of this year.

The country's Financial Services Commission (FSC) convened a meeting on Wednesday to outline the key priorities for the upcoming bill. Vice Chairman Kim So-young emphasized the urgency of developing a robust regulatory framework, aligning with the global trend of strengthening crypto regulations to enhance investor protection and mitigate regulatory uncertainty.

South Korea's initial crypto regulatory framework, enacted in July 2022, introduced stricter requirements for exchanges, including the mandate to safeguard at least 80% of user crypto deposits in cold storage.

The upcoming legislation aims to adopt a more comprehensive and systematic approach, encompassing service providers, crypto users, and the broader crypto market. Key areas of focus include:

• Increased Transparency in Crypto Listings: Implementing stricter disclosure requirements for exchanges when listing new cryptocurrencies, mirroring those applicable to traditional finance companies.
• Stablecoin Regulation: Reviewing global best practices for stablecoin issuers, including reserve asset management and user redemption rights.

South Korea boasts a vibrant cryptocurrency market, with Upbit, a local-only exchange, ranking as the world's third-largest centralized exchange in terms of trading volume last month.

This second phase of regulatory development signifies South Korea's commitment to fostering a responsible and sustainable crypto ecosystem while safeguarding investor interests.

January 2025, Cryptoniteuae