South Korean crypto exchanges must set aside $2.3 million in reserves starting September

South Korean cryptocurrency exchanges will need to set aside at least 3 billion won ($2.3 million) in reserves held in bank accounts starting from September, as the country steps up scrutiny of consumer protection measures in the nascent industry.

Major Korean crypto exchanges, including Upbit and Bithumb, are on track to comply with the new requirements as outlined in guidelines released in July by the Korea Federation of Banks, local media News1 reported today.

In the guidelines titled “Virtual Asset Real-Name Account Operation Guidelines,” the banking association asked crypto exchanges to set aside at least 3 billion won or the equivalent of 30% of their daily average deposits in reserves so that they can “fulfill their liability for damages to users” should a risk event occur. The size of such funds will be capped at 20 billion won, according to the guidelines.

New legislation in South Korea

In June, South Korean lawmakers passed legislation to better protect crypto investors. The new legislation, comprised of 19 crypto-related bills, gives the Financial Services Commission and the Bank of Korea the authority to oversee crypto operators and asset custodians. The new bill also allows authorities to enforce penalties in cases of unfair trading of virtual assets.

Last month, the FSC said it would require domestic companies to disclose cryptocurrency holdings from next year as part of new accounting rules. The new rules will also require crypto issuers to disclose information including token details, business models and internal accounting policies.