South Korea Explores Crypto Account Freezing Measure To Prevent Market Manipulation
South Korea’s monetary authorities are reportedly contemplating introducing a system that enables regulators to conduct pre-emptive crypto account freezes to cease digital asset value manipulation.
FSC Mulls Crypto Account Freezing System
On Tuesday, a neighborhood information media outlet reported that the Financial Services Commission (FSC) is discussing introducing a system to stop suspects from hiding or withdrawing unrealized earnings from market manipulation associated to crypto belongings.
In a January 6 assembly, the regulators revealed that they’ve been discussing the matter since November, exploring the proposal for prosecution measures towards suspects of crypto asset value manipulation.
According to Newsis, some officers think about that there’s a necessity “to enhance the present Virtual Asset User Protection Act by implementing measures for the confiscation of felony proceeds or the preservation of restoration funds upfront.”
The measure would limit fund outflows akin to withdrawals, transfers, and funds from a crypto-related account suspected of acquiring illicit positive aspects via typical market manipulation ways, together with pre-purchasing, repeated trades through automated buying and selling, shopping for at inflated costs, and profit-taking.
Under the present guidelines, authorities should get hold of courtroom warrants to freeze belongings linked to crypto manipulation, which leaves no means to behave rapidly and stop asset concealment beforehand. One committee member reportedly referenced the fee suspension system for inventory value manipulation, which was launched via the revision of the Capital Markets Act in April.
This system noticed the primary home case of preemptively freezing accounts suspected of unfair buying and selling final September, when the Joint Task Force for Eradicating Stock Price Manipulation imposed these measures on 75 accounts concerned in a KRW 100 billion inventory value manipulation case by a gaggle of rich people.
Some FSC officers allegedly emphasised that this method is necessary for crypto belongings, arguing that they’re simpler to hide as soon as transferred to non-public wallets, with one noting that “presently, solely trade deposits and withdrawals are blocked, whereas withdrawals to monetary establishments stay attainable. Blocking these withdrawals would assist swiftly stop concealment.”
Another FSC member affirmed that “fee suspension is a step earlier than restoration preservation; it could be good if we may implement it proactively,” whereas others requested whether or not provisions associated to unfair buying and selling within the Capital Markets Act might be partially replicated within the Second Phase of the Virtual Asset User Protection Act.
Second Phase of SK’s Virtual Asset Push
South Korea’s Second Phase of the Virtual Asset User Protection Act was anticipated to be submitted on the finish of 2025. However, it has been delayed till the beginning of 2026 as a consequence of an ongoing disagreement between the FSC and the Bank of Korea (BOK).
As reported by Bitcoinist, monetary authorities have been clashing over guidelines associated to the issuance and distribution of stablecoins, disagreeing on the extent of banks’ function within the issuance of won-pegged tokens.
The central financial institution has pushed for a consortium of banks proudly owning no less than 51% of any stablecoin issuer in search of approval within the nation. The FSC has shared considerations that giving a majority stake to banks may cut back participation from tech companies and restrict the market’s innovation.
Despite the delay, the principle insurance policies of the crypto framework have been reportedly determined. Notably, the FSC’s draft will embrace investor safety measures akin to no-fault legal responsibility for crypto asset operators and isolation of chapter dangers for stablecoin issuers.
The invoice is predicted to require crypto asset operators to adjust to disclosure obligations in addition to phrases and circumstances. In addition, “impose strict legal responsibility for damages on digital asset operators in accordance with the Electronic Financial Transactions Act in instances of hacking or pc system failures.”
