Virtual Currency Exchange Self-Trading Ban Law Approved at Cabinet Meeting

Cryptocurrency Exchanges Prohibited from Listing Self-Issued Coins
Employees Also Banned from Trading Through Their Own Exchanges

[Asia Economy Reporter Ji Yeon-jin] From now on, cryptocurrency exchanges will be prohibited from trading coins (virtual currencies) they have issued themselves, and employees will also be banned from trading. Violations of this rule will result in business suspension or fines of up to 100 million KRW.

The Financial Services Commission announced on the 28th that the amendment to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, containing these provisions, was approved at the Cabinet meeting.

This amendment was prepared to prevent user damages and ensure transparency in cryptocurrency trading after incidents where some cryptocurrency exchanges inflated trading volumes and manipulated prices through "wash trading" by buying and selling coins they issued themselves to attract investors.

Accordingly, cryptocurrency exchanges must restrict trading of virtual currencies issued by the business operator or related parties, and virtual asset service providers and employees must establish standards to limit virtual asset trading through the affiliated exchange.

However, a six-month grace period will be granted for already issued virtual assets. Exceptions are allowed when it is necessary to exchange virtual assets acquired from non-residents into Korean won to pay taxes for withholding on domestic-source income of non-residents, or when paying blockchain usage fees such as transfer fees (gas fees) in cryptocurrency.

Cryptocurrency exchanges must incorporate these standards into internal guidelines such as work instructions and prepare them within one month, and failure to comply will result in business suspension or fines of up to 100 million KRW.