New Regulations for Cryptocurrencies are on the Way in South Korea
South Korean financial authorities are planning to issue new guidelines imposing stricter regulations for token listings on centralized cryptocurrency exchanges.
With these regulations, which will come into force at the end of April or the beginning of May at the latest, South Korean financial authorities will ban the listing of digital assets that have experienced hacking incidents on local exchanges, according to local media News1. These bans can only be lifted after the root of the problem is fully determined. In addition, foreign digital assets can be listed on local exchanges if a white paper or technical manual has been published for the South Korean market. However, tokens that have already been listed on a licensed exchange for two years may not have to meet these new criteria. Additionally, the issued directives may require exchanges to delist cryptocurrencies if issuers do not adequately disclose essential information, such as differences between actual circulation and the disclosed amount.
Opinion Collection and Legislation Updates The South Korean government is gathering opinions from local exchanges. Starting in late 2023, the Financial Supervisory Service is creating listing guidelines with feedback from stakeholders such as the Digital Asset Exchange Association. The Financial Services Commission is a government agency responsible for overseeing financial institutions and financial markets in South Korea. The South Korean government released a new update to the Virtual Asset Users Protection Act in early February.
This legislation introduces serious criminal sanctions, such as fines ranging from three to five times the amount of illegal profits and fixed-term imprisonment of more than one year. A serious industry crisis involving Terraform Labs and its founder, Do Kwon, a South Korean citizen, triggered this law change. 
Terra's collapse in May 2022 caused a loss of more than $450 billion. Increase in Digital Tracking and Suspicious Transactions The Gyeonggi Provincial Tax Justice Department, South Korea's most densely populated province, collected 6.2 billion won ($4.6 million) in undeclared taxes in 2023 by implementing a digital tracking system for tax evaders' crypto accounts. South Korea's Financial Intelligence Unit announced that 49% more suspicious transactions were reported on local digital asset exchanges in 2023 compared to 2022. On February 14, the FIU revealed its 2024 work plan, highlighting critical data and strategic initiatives related to regulating the crypto market.
