South Korea is preparing to strengthen supervision of its cryptocurrency market, with regulators signaling tougher action against manipulation and operational failures following a series of high-profile incidents.
Financial Supervisory Service Targets Market Abuse
The Financial Supervisory Service (FSS) announced plans to intensify oversight of crypto trading practices as part of its annual policy agenda. The regulator intends to launch focused investigations into activities that disrupt market order, including price manipulation by large traders and coordinated schemes that artificially inflate token prices.
Authorities are also scrutinizing tactics such as exploiting suspended deposits or withdrawals on exchanges, rapid price-pumping strategies, and the use of automated trading tools to distort markets. The spread of misleading information through social media channels has also been flagged as an area of concern.
Stronger Penalties for IT Failures
Alongside crypto-specific measures, the FSS plans to impose heavier penalties on financial institutions for IT-related accidents. This follows recent operational failures that raised questions about consumer protection and system resilience across the broader financial sector.
Exchange Error Highlights Systemic Risks
Regulatory attention has intensified after a major incident involving Bithumb, the country’s second-largest crypto exchange. The platform mistakenly distributed a large amount of bitcoin to users during a promotional event before recovering nearly all of the funds, underscoring operational and risk management weaknesses.
The FSS has also formed a task force to prepare for the upcoming Digital Asset Basic Act. The legislation is expected to introduce clearer rules on token disclosures, exchange listings, licensing standards, and oversight of stablecoin issuers, with final provisions anticipated in the first quarter of the year.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.