South Korea Establishes Foundation To Protect Crypto Users' Funds

According to Cointelegraph, South Korean cryptocurrency users will soon have a new safeguard with the establishment of the Digital Asset User Protection Foundation. This initiative, approved by the Financial Services Commission (FSC) and spearheaded by the Digital Asset Exchange Joint Consultative Group (DAXA), aims to facilitate the return of funds trapped in defunct exchanges. The foundation is expected to commence operations in October. The FSC highlighted that out of 22 cryptocurrency exchanges in South Korea, 10 have shut down and three have suspended operations, raising concerns about the retrieval of users' funds. The safety of customers' funds is also a significant issue, as private keys to users' virtual asset wallets are stored with these exchange service providers. To address these concerns, a more systematic management mechanism is deemed necessary, alongside voluntary efforts from the closed exchanges. The Digital Asset User Protection Foundation will work with the exchanges to transfer users' funds and virtual assets to the foundation. Subsequently, a bank will be selected to hold users' cash, and a South Korean won-based exchange service provider will manage their virtual assets. The foundation will then inform users about the process for the return of their assets. The foundation will be supported by an operating committee comprising representatives from the bank and exchange handling the assets, various government agencies, and private sector experts. The government has pledged to support the foundation, ensuring smooth consultations regarding the transfer of users' assets. For any future exchange closures, authorities will guide the transfer of customers' assets to the foundation. South Korea enacted the Virtual Asset User Protection Act on July 19, mandating that exchanges keep customer deposits in banks and separate customer virtual assets from their own.