News
South Korea Launches Cryptocurrency Monitoring System to Fight Market Manipulation
South Korea’s financial watchdog, the Financial Supervisory Service, on Thursday revealed a 24-hour nationwide surveillance network designed to track and trace cryptocurrency transactions with local exchanges to combat cryptocurrency market manipulation and fraud.
The launch of the system will coincide with the new regulations for cryptocurrency investors that will come into force on July 19. The new law, the Act on the Protection of Users of Digital Goodspassed in 2023, it would regulate unfair trading practices and apply securities rules to virtual assets. By then, cryptocurrency exchanges will be required to submit data to the monitoring network.
The regulator said it would monitor accounts linked to “suspicious” fraudulent activity for anomalous behavior. This could include trades that exceed normal ranges, sudden out-of-the-ordinary changes in volume, and other forms of price manipulation that could indicate pump-and-dump or wash trade patterns.
Unlike more tightly regulated securities, the cryptocurrency market is notoriously volatile and has been deemed less investor-friendly by many governments. While major tokens such as bitcoin and ethereum have lower volatility due to their extremely large market caps, smaller tokens, or altcoins, on the other hand, exhibit extremely high volatility and are commonly used as investment vehicles due to their risky nature. As assets with smaller market caps and fewer market participants, altcoins are also ripe targets for market price manipulation.
Market risks are such that cryptocurrency industry players in South Korea have sought to get ahead of government regulators by announcing new self-regulatory standards that will also be implemented on July 19. Made up of 20 local cryptocurrency exchanges, the Digital Asset Exchange Association, announced which would revalue more than 1,300 alternative token listings by the end of 2024. The plan is to determine whether a given currency complies with regulations and, if not, will be delisted.
South Korea is home to one of the largest cryptocurrency markets in the world, and trading on the market is geared towards altcoins. According to data From Kaiko, the South Korean won became the most used currency for cryptocurrency trading in the first quarter of 2024.
To build the monitoring network, the FSS said, it worked with exchanges to prepare a standardized reporting for transaction data. As a result, it will be able to more easily separate irregular transaction data from the rest. According to the regulator, the country’s major local exchanges have already implemented the monitoring system, subjecting almost all transactions in the country to its control.
The FSS also called on exchanges to form dedicated teams to monitor suspicious transactions and set up a hotline for exchanges to report suspected illegal activity.
Image: Plumage
Your vote of support is important to us and helps us keep the content FREE.
By clicking below, you support our mission to provide free, in-depth and relevant content.
Join our community on YouTube
Join a community of over 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies Founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many other luminaries and experts.
“TheCUBE is a great partner for the industry. You guys are really a part of our events and we really appreciate your presence and I know people appreciate the content you create as well” – Andy Jassy
THANK YOU