South Korea's cryptocurrency exchanges are quickly adopting new monitoring systems due to the imminent implementation of the Virtual Asset User Protection Act (VAUPA) this Friday.
The VAUPA mandates exchanges to establish sophisticated monitoring systems to detect and report suspicious activities to regulatory bodies.
These measures are aimed at curbing price manipulation, fraudulent transactions, and misuse of insider information.
Upbit Leads Proactive Measures
Upbit, one of the largest crypto exchanges in South Korea, has been proactive in developing an advanced unfair trading monitoring system.
This system builds on existing infrastructure and includes order book information alongside advanced data analysis tools.
Importance of proving compliance with the VAUPA
A Dunamu official, speaking to the Korea Times, stressed the importance of proving compliance with the VAUPA.
The official highlighted efforts to enhance their monitoring system to ensure a safe environment for virtual asset investors.
Industry players emphasise the importance of incorporating order book information into the new monitoring requirements.
This aspect is crucial for regulators to identify and address unfair trading practices effectively.
The VAUPA, enacted by the Financial Services Commission (FSC) in February, aims to enhance transparency in the cryptocurrency sector.
The legislation defines digital assets and outlines penalties for illegal operations. It represents a significant step in regulating South Korea’s crypto market.
Catalyst for Regulatory Action
The collapse of Terraform Labs in 2022, leading to significant market losses, was a major factor prompting the enactment of VAUPA. This legislation seeks to address the regulatory gaps exposed by such incidents.
Industry-Wide Compliance and Self-Regulation
As July 19 approaches, exchanges are expected to implement the new monitoring systems in line with VAUPA. Additionally, the Digital Asset Exchange Association, comprising 20 crypto exchanges, has announced self-regulatory standards.
These include reevaluating over 1,300 alternative token listings by the end of the year.
South Korean crypto exchanges are implementing advanced monitoring systems as the VAUPA law comes into effect, aiming to prevent market manipulation and ensure compliance.
The need for such stringent regulations highlights the vulnerabilities and potential for abuse within the rapidly evolving digital asset market.
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