South Korean Regulator, DAC Is on the Cards
The recent collapse of Terra left many in the cryptoverse rattled, predominantly those 280 000 individuals affected in South Korea. In response to this, the South Korean government has ongoing plans to form a committee titled the Digital Assets Committee (DAC). The Committee has been pipelined for 2022. It aims to provide investor protections, get tabs on unjust trading and provide criteria for exchanges to follow regarding the listing of coins.
What Does This Mean for VASPs?
Exchanges play a significant role in the South Korean economy; at the end of 2021, it was estimated that the daily transaction amount of virtual assets amounted to just over USD 9 billion. However, to date, there are no investor protections in place.
Once the DAC is formed and activated, South Korean virtual asset service providers (VASPs) will be closely monitored to ensure that no illicit activities are being conducted. The big South Korean VASPs, like Upbit and Bithumb, are playing their part and cooperating to prevent another Terra scenario.
What You Should Know About the DAC
1. The DAC is being formed due to public demand
There needs to be a level of protection in place for investors to prevent giant losses like those incurred with the fall of Terra.
Currently, the crypto scene is handled by more than one government organisation, yet none of these organisations are financial watchdogs.
2. The Committee will function as a unifying body for all digital currency regulations
The DAC will be launched after the inauguration of the new Financial Services Commission Chairman.
3. The Committee will be responsible for making policy recommendations
The recommendations will include the criteria exchanges need to follow when;
Enacting investor protections,
Dealing with initial coin offerings (ICOs).
South Korea is moving swiftly in the crypto arena. Current South Korean President Yoon Suk-Yeol is pro-crypto and realises the importance of crypto investing for young South Koreans due to increasing debt.
South Korea has recorded more than 5 million accounts from its top 3 exchanges, which accounts for 10% of the country’s population.
Read more about South Korean FATF Travel Rule regulations here.