Key takeaways:
- Investors in digital assets must get interest when depositing their cash into an exchange by July 2024, according to a notification released by the FSC.
- The South Korean regulator not only classified virtual assets but also established how to manage customer deposits for virtual asset providers.
Investors in digital assets must get interest when depositing their cash into an exchange by July 2024, according to a notification released by the Financial Services Commission (FSC), a South Korean regulator.
The guidelines did, however, make it clear that the law does not apply to nonfungible tokens (NFTs) or central bank digital currencies (CBDCs).
The FSC intends to offer such legislative guidelines, according to reports from local media outlets on December 10. The regulator did point out that there might be exceptions even with the absence of NFTs.
As per the research, tokens that are released in significant amounts and serve as a payment method, even if they are classified as NFTs, might be included in the virtual asset classification. In this instance, upon deposit into exchanges, the assets might be eligible for interest.
The South Korean regulator not only classified virtual assets but also established how to manage customer deposits for virtual asset providers. It was made clear in the letter that exchanges were required to maintain user deposits separately and turn over their own assets to a bank. It is also necessary to keep 80% of the funds in a cold wallet.
The guidelines will also specify how to get ready in case of computer disasters or hacks. According to the regulation, companies that offer virtual asset services must get insurance or build up reserves. In the meanwhile, unless it is absolutely required and demanded by courts and financial regulators, the law also forbids blocking deposits or withdrawals.
The laws pertaining to the cryptocurrency industry in South Korea have been strengthened. Users were asked by the nation’s financial officials to report unlicensed cryptocurrency exchanges operating in the area earlier this month. Leading the endeavor were the Financial Intelligence Unit of South Korea and the Digital Asset Exchange Association (DAXA).
