South Korea’s FSC proposes rules to safeguard crypto users
The financial watchdog published suggested rules to protect digital asset customers under the Virtual Asset User Protection Act passed earlier in 2023. In a Dec. 11 press release, South Korea’s Financial Services Commission (FSC) proposed guardrails to oversee the operations of virtual asset service providers (VASPs) and cushion crypto users from financial risks. Provisions in the act include requirements for custody of customer deposits using cold storage and criminal charges to curtail bad actors among both VASPs and virtual currency users. According to the FSC, operators like crypto exchanges should store 80% or more of their customers’ digital assets in cold wallets. Cold wallets are hardly connected to the internet and face fewer attack vectors than hot wallets, which are typically internet-linked to support frequent transactions. The FSC’s act also defined digital assets, noting that NFTs and CBDCs do not fall under the purview of proposed laws. The rules ...