South Korea Proposes New Cryptocurrency Exchange Regulations to Prevent Asset Misallocation

Gate News message, April 21 — South Korea's ruling Democratic Party member Lee Heon-seung introduced an amendment to the Virtual Asset User Protection Act on April 20 to prevent cryptocurrency exchange mishaps, following a major incident in February when a leading South Korean exchange mistakenly transferred 620,000 BTC to users as compensation.

The proposed amendment mandates that cryptocurrency exchanges periodically verify the consistency between customer digital assets held in custody and those actually held on-chain, identifying both the types and total quantities of assets. Additionally, exchanges must establish risk management frameworks to identify, assess, monitor, and control trading-related risks in a timely manner.

The legislation also requires exchanges to maintain customer digital assets in segregated wallets. The opposition Democratic Party similarly introduced a comparable amendment on March 4, also emphasizing separate custody arrangements for user assets.