"Unfair Trading of Virtual Assets, Possible Imposition of Fines Depending on Investigation Results"

Unfair Trading Practices First Monitored by Exchange
Fines Can Be Imposed Upon Notification of Investigation and Disposition Results
Official Consultation Channel Established Between Financial Authorities and Prosecutors

The financial authorities have detailed the regulations for investigating the virtual asset market in line with the upcoming enforcement of the 'Virtual Asset User Protection Act' in July. The initial monitoring of suspicious transactions related to unfair trading practices will be the responsibility of virtual asset exchanges, which must immediately notify the Financial Services Commission and the Financial Supervisory Service upon detecting any violations. If investigation or disposition results are reported by investigative agencies, the financial authorities may impose fines. An official consultative body between the financial authorities and the prosecution will also be established.

On the 27th, the Financial Services Commission and the Financial Supervisory Service announced the public notice of the draft regulations for virtual asset market investigation operations reflecting these details.

When suspicious transactions occur, virtual asset exchanges must take appropriate measures to protect users, including △providing transaction caution notices, △fact-checking or disclosing results regarding rumors, △limiting order quantities and frequency, and △suspending transactions.

Additionally, if virtual asset exchanges suspect violations of unfair trading practices based on their monitoring results, they must notify the Financial Services Commission and the Financial Supervisory Service. However, if there is sufficient evidence of unfair trading practices or if investigative agencies request it in relation to ongoing investigations, the exchanges must report directly to the investigative agencies.

The Financial Services Commission and the Financial Supervisory Service may investigate unfair trading practices using means such as requesting submission of statements, testimonies (appearances), ledgers and documents, and financial transaction information. When requesting submission of statements, ledgers, or attendance, the procedures stipulated in the regulations, including the use of prescribed request forms, must be followed.

Based on investigation results, the Financial Services Commission will take actions such as reporting or notifying investigative agencies following the procedures of 'prior notice → submission of opinions → resolution by the Financial Services Commission' according to the action standards set in the regulations. However, if immediate notification to investigative agencies is necessary or if there is a risk of the suspect fleeing or destroying evidence, prompt reporting or notification (fast track) can be carried out by the Chairman of the Financial Services Commission without a formal resolution.

If investigation or disposition results are reported by investigative agencies, fines may be imposed. However, fines can also be imposed before receiving such reports if there is consultation with the Prosecutor General or if one year has passed since reporting or notification. Detailed criteria for calculating fines have also been established.

A 'Virtual Asset Market Investigation Agency Council' will be established to discuss investigation policies, joint investigations, and division of work among related agencies such as the Financial Services Commission, the Financial Supervisory Service, and the prosecution. A 'Virtual Asset Market Investigation Deliberation Committee' will also be set up as a pre-review body to advise the Financial Services Commission on measures.

The Financial Services Commission and the Financial Supervisory Service stated, "With the establishment of the virtual asset market investigation regulations, a detailed regulatory system for unfair trading practices will be created, progressing from 'monitoring suspicious transactions → investigation by the Financial Services Commission and the Financial Supervisory Service → investigation → criminal punishment and imposition of fines.' We expect this will enable effective and systematic regulation of unfair trading practices in the virtual asset market."

The related regulations will be enacted after a 40-day public notice period from March 28 to May 7, during which opinions from related agencies will be collected. They are scheduled to be enforced from July 19 along with the Virtual Asset User Protection Act.

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