- A bank must be entrusted by exchanges to keep user deposits distinct from its own assets.
- Preparation for hackers and other computer mishaps will also be part of the guidelines.
The South Korean Financial Services Commission (FSC) has outlined rules for the passage of the Virtual Asset User Protection Act. These rules, which are expected to take effect on July 19, 2024, are an attempt to create a trustworthy virtual asset market and a safe environment for consumers.
Notable exceptions to the Virtual Asset User Protection Act, as announced in a recent information release by the FSC, include NFTs and deposit tokens associated with Central Bank Digital Currency (CBDC). Importantly, the goal of this strategic step is to make sure the law complies while also adapting to new aspects of the virtual asset market.
The report states that tokens may be classified as virtual assets even if they are classified as NFTs; this is because they serve as a payment mechanism and are released in huge numbers. If that’s the case, the assets might earn interest when put into exchanges.
Safety of Customer Deposits
In addition to establishing a system for the categorization of virtual assets, the South Korean regulator also decided how virtual asset providers should deal with customer deposits. A bank must be entrusted by exchanges to keep user deposits distinct from their own assets, as stated in the notice. Another requirement is that a cold wallet holds 80% of the money.
Preparation for hackers and other computer mishaps will also be part of the guidelines. Service providers of virtual assets were instructed by the authorities to either get insurance or put aside funds. However, unless there is an essential need or a court or financial regulator requests it, the law forbids restricting deposits or withdrawals.
Highlighted Crypto News Today:
Beyond Digital Assets: The Case for Diversifying Your Investment Portfolio
