South Korea, known for its active crypto market, is taking proactive steps to bolster consumer protection within the sector. As of September, the country’s native crypto exchanges will be required to maintain a minimum reserve of 3 billion won ($2.3 million). This move reflects South Korea’s commitment to ensuring the safety and security of cryptocurrency users.

Elevated Financial Cushion: A Shield for User Protection

The new policy aims to equip exchanges with the financial resilience necessary to manage unexpected financial challenges and potential liabilities. By implementing this requirement, the South Korean authorities demonstrate their keen foresight regarding the growth of the crypto industry, while assuming the responsibility of safeguarding consumer interests.

In the crypto space, trust and security are of paramount importance. Major exchanges like Upbit and Bithumb are reportedly gearing up to meet the stipulated requirements ahead of the deadline. This development follows the release of guidelines in July by the Korea Federation of Banks, as reported by local media outlet News1.

The guidelines, titled “Virtual Asset Real-Name Account Operation Guidelines,” stress the importance of exchanges allocating either 3 billion won or 30% of their daily average deposits to maintain reserves. This strategic reserve ensures that exchanges can effectively fulfill their liability to compensate users in the event of unanticipated risks or liabilities. However, the guidelines also define an upper limit of 20 billion won for these reserve funds.

Building Trust in South Korea’s Crypto Infrastructure

By mandating substantial financial reserves for exchanges, South Korea significantly reduces the potential for a crisis that could adversely impact users. Moreover, the country’s legislative body recently approved new laws in June to enhance safeguards for cryptocurrency investors. This comprehensive framework encompasses 19 separate bills related to digital assets, granting regulatory authority to the Financial Services Commission and the Bank of Korea over cryptocurrency entities and custodians of digital assets.

Under the updated legislation, authorities possess the ability to impose sanctions if they identify any unfair virtual asset transactions. While welcoming these advancements, Lee Suh Ryoung, the chief secretary general of the Korea Blockchain Enterprise Promotion Association in Seoul, notes that the regulatory landscape still predominantly approaches crypto from a traditional finance perspective.

Rise in Altcoin Investments Among South Korean GenZ Investors

In a recent study, it was revealed that approximately 82.5% of South Korean individuals in their 20s, belonging to Generation Z, are investing in altcoins, with one notable exception – Ethereum (ETH). Interestingly, XRP emerges as the clear favorite, with about 20.7% of these younger investors considering it their top altcoin investment choice.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.