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From June, non-profit corporations and virtual asset exchanges in South Korea will be allowed to sell virtual assets as they will be able to issue virtual asset selling trading accounts. 

As of May 1, draft guidelines were finalized by Vice Chairman Kim So-young of the Financial Services Commission, who held the 4th Virtual Asset Committee at the Government Complex Seoul. 

Also, due to concerns raised about user damage, such as “listing beams” when supporting transactions (listing) in the virtual asset market, there were discussions on the revision of the “Best Practices for Transaction Support.” 

South Korea sets rules defining corporate participation in the virtual asset market

The first measure states that in order to secure an appropriate internal control system and transparency, virtual asset sales will be restricted to “outside audit corporations with more than 5 years of business.” 

After that, a “Donation Review Committee” (tentative name) must be established within the corporation to review the appropriateness of donations and plans for cashing in advance. The purpose of transactions and sources of funds must also be confirmed and verified. 

The donation target is limited to virtual assets traded on three or more KRW exchanges, and the donated virtual assets are to be cashed out immediately upon receipt, because the smooth cashing out of virtual assets is a prerequisite for the appropriate use of donated virtual assets. 

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In addition, only donations and transfers through domestic KRW exchange accounts are allowed, so that banks, exchanges, and corporations can perform customer verification in an overlapping manner.

Rules for selling virtual assets on virtual asset exchanges 

The guidelines created for selling virtual assets on virtual asset exchanges are all about preventing conflicts of interest with users by minimizing market impact. 

They state that only exchanges that have been reported as virtual asset business operators as part of the Act on Reporting and Use of Specific Financial Transaction Information are eligible to sell virtual assets, and only sales for the purpose of covering operating expenses are permitted. 

The virtual assets subject to sale are limited to the top 20 in terms of market capitalization on the five Korean won exchanges, while daily sales limits and the prohibition of sales through one’s own exchange also apply. 

According to the Financial Services Commission, there is a plan to “establish customer verification measures for virtual asset transactions between non-profit corporations and exchanges in May.” 

The commission will also reveal a plan to issue real-name accounts to listed corporations and corporations registered as professional investors in the second half of the year.

As for concerns about user damage due to the “listing beam” phenomenon, the government is addressing them by establishing a minimum buffer while focusing on strengthening the transaction support standards for the listing beam phenomenon, zombie coins, meme coins, that cause instability in the virtual asset market. 

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Users and interested parties can expect the government to continue working on these rules throughout this month and the rest of the year. The Financial Services Commission and the Financial Intelligence Unit also plan to provide real-name accounts to listed corporations and corporations registered as professional investors. 

All these rules and measures are being put in place to ensure all participants play nicely and people don’t end up losing money while trading. The emphasis is on overall fairness and reducing the ability of bad actors to wreak havoc.

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