Financial Authorities Eye Enhanced Monitoring of Virtual Asset Exchanges

The Financial Supervisory Service (FSS) is set to overhaul its virtual asset monitoring system in response to the heightened volatility in the market, particularly following Bitcoin's price surge post-U.S. presidential election. The FSS plans to inspect the operational status of the abnormal transaction monitoring systems of virtual asset exchanges within the year, aiming to improve both the monitoring system and consumer damage prevention processes by the first half of next year.

Currently, exchanges are identifying and analyzing abnormal transactions by checking various factors such as price and trading volume fluctuations, trading patterns, periodic price increase rates, wash trading, matched orders, high-priced buy orders, and order involvement rates according to FSS guidelines. However, many cases of suspected abnormal transactions still fall short of current detection standards.

Concerned that the recent increased volatility in the virtual asset market could lead to undetected abnormal transactions, financial authorities are guiding exchanges to refine detection standards by considering complex factors in addition to existing quantitative criteria and reflecting them in internal regulations. The FSS is also revamping its own abnormal transaction detection system.

In addition to enhancing detection standards, financial authorities will guide exchanges to strengthen consumer damage prevention measures. Exchanges must inform users of transaction cautions and suspend transactions for the relevant user or virtual asset in the event of an abnormal transaction, as per current virtual asset market investigation regulations. However, recent incidents, such as the "Avail" surge, have highlighted the need for more effective user protection measures.

Domestic exchanges are also taking steps to supplement investor protection measures as interest in virtual assets surges. For instance, Dunamu, the operator of Upbit, upgraded its market monitoring system earlier this month, while Bithumb is strengthening its system to preemptively block unfair trading and prevent money laundering.