South Korea’s financial watchdog said it will step up oversight of the cryptocurrency market and impose tougher penalties on financial firms for IT-related accidents, following high-profile incidents that exposed risks to market integrity and consumer protection.
The Financial Supervisory Service (FSS) unveiled its annual policy agenda on Monday, which includes planned investigations into high-risk practices in the crypto market, alongside the introduction of punitive fines for IT infrastructure failures across the financial sector, Yonhap news agency reported.
As part of its crypto market supervision, the FSS said it will conduct targeted probes into activities that undermine market order, including price manipulation by large traders, or so-called “whales,” as well as tactics such as artificially inflating prices of tokens whose deposits and withdrawals have been suspended on specific exchanges.
Other practices under scrutiny include rapid price-pumping schemes, market manipulation using application programming interface orders, and the distribution of false information through social media, according to the report.
The regulatory move follows a recent incident at Bithumb, South Korea’s second-largest crypto exchange, which mistakenly transferred 620,000 BTC, worth roughly $44 billion, to hundreds of users during a promotional event on Friday evening, according to a BBC report. The exchange said it has recovered 99.7% of the mistakenly transferred bitcoin.
Separately, the FSS said it has formed a task force to prepare for the introduction of the Digital Asset Basic Act, a key piece of second-stage crypto legislation. The group will work on disclosure frameworks for token issuance and exchange listing support, as well as licensing review manuals for digital asset service providers and stablecoin issuers, according to Yonhap. The final version of the legislation is anticipated in the first quarter of this year.
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