South Korea plans to segment virtual asset service providers to strengthen user protection

According to the South Korean media "Daily Economic News" on June 13th, the South Korean financial regulatory agency is taking measures to redefine the operation of virtual asset service providers (VASPs). The purpose of this move is to restrict the activities of these service providers, which currently include a wide range of services such as listing, trading, settlement, and custody. Last month, the Financial Services Commission and the Financial Supervisory Service submitted a detailed plan on future regulation and legislative measures in the field of cryptocurrency to the National Policy Committee of the National Assembly. The plan was formulated to comply with the upcoming "Virtual Asset User Protection Act." The authorities propose to divide VASP business into specific functions such as trading, listing, custody, management, and consulting and custody services. They suggest that custody and management, as well as consulting and custody services, may be the easiest to separate from existing comprehensive services. At the same time, financial institutions stated that separating custody functions and allocating them to separate entities is a medium- to long-term goal that depends on market and regulatory developments.