South Korean authorities propose to tighten regulation of cryptocurrency exchanges

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South Korean lawmakers have proposedamend the Digital Assets Act to tighten controls on cryptocurrency exchanges to prevent situations like FTX and Terra.

Republican Yoon Chang-Hyun fromThe Power of the People party believes that it is necessary to expand the powers of the South Korean Financial Services Commission (FSC) and the South Korean Financial Supervisory Service (FSS) so that the agencies can monitor and audit the activities of cryptocurrency platforms. If the new amendments are adopted, trading platforms will not be able to arbitrarily use the funds of their clients, as happened with the FTX exchange and Alameda Research.

Cryptocurrency exchanges will also be prohibitedtake any action in the event of market fluctuations or changes in trading volume. Control over these activities will be transferred to financial authorities. In addition, exchanges will be required to immediately report any unfair activity to the FSS Governor, who will take appropriate measures to prevent fraud, money laundering or other crimes related to cryptocurrencies.

Chang-Hyun believes that the proposed amendmentswill allow financial authorities to more strictly control the trading of crypto assets and reduce the number of dishonest transactions in the market. This will protect investors from losses by preventing incidents like the collapse of FTX and Terra from happening again.

Let us remind you that the South Korean prosecutor's officeTogether with Interpol, they are still looking for the co-founder of the Terra ecosystem, Do Kwon. In October, South Korean authorities revoked his passport over fraud allegations. Recently, another co-founder of Terraform Labs was brought into the investigation, who could have contributed to the collapse of the project.

Last week, Southern Financial IntelligenceKorea (KoFIU) began to investigate the placement of its own tokens by local cryptocurrency exchanges. According to KoFIU observations, this factor most contributes to the collapse of cryptocurrency ecosystems.