South Korea’s first major set of cryptocurrency regulations is now live to safeguard crypto investors in the nation.
The new framework introduces stringent requirements for Virtual Asset Service Providers (VASPs). Dubbed the Protection of Virtual Asset Users (PVAU), it mandates VASPs to hold at least 80% of users’ digital assets in cold storage.
The Financial Services Commission (FSC) will designate credible financial institutions to handle fiat deposits made towards VASPs. Further, VASPs must segregate customer funds from VASP funds and invest them in “risk-free” assets to generate a yield.
This safeguard ensures that in the event of a cryptocurrency exchange going bankrupt, the respective financial institutions would directly repay customer funds.