South Korea's first crypto regulatory framework has officially come into force, Binance has reported.
This was put in place quickly after the collapse of Terra-Luna and FTX back in 2022, with the aim of offering more protection to investors. The framework, known as the Virtual Asset User Protection Act, was passed on July 18, 2024 and has a one-year grace period to refine the details.
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Under the law, South Korean digital asset platforms must now meet stricter requirements, such as keeping at least 80% of users' deposits in separate warehouses from their own funds.
They must also use an authorized local bank for cash deposits and maintain the same amount and type of crypto reserves as customer deposits.
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Exchanges are also required to have insurance or a reserve fund in case of hacks or liquidity problems.