South Korea’s Financial Supervisory Service (FSS) plans to enhance the monitoring of abnormal transactions in virtual asset exchanges as market volatility intensifies, particularly following the U.S. presidential election.
This move aims to address gaps in current systems and bolster consumer protection measures.
Virtual asset exchanges currently identify suspicious transactions using FSS guidelines, analyzing factors like price and trading volume fluctuations, trading patterns, periodic price increases, wash trading, matched orders, and high-priced buy orders.
Despite these measures, many cases suspected of being abnormal fail to meet detection standards, raising concerns about the system’s effectiveness.
The FSS intends to inspect these systems by year-end and implement improvements by mid-2025. Plans include refining detection criteria to account for more complex factors and integrating them into exchanges’ internal regulations.
The agency is also revamping its own detection framework to better identify irregularities.
Recent incidents, such as the “Avail” case, where the token surged 1400% on its listing day on Bithumb, have highlighted deficiencies in monitoring systems and consumer protection measures.
The FSS will review whether exchanges are effectively implementing safeguards, including notifying users of suspicious transactions and suspending trading when necessary.
Exchanges are responding to increased scrutiny. Dunamu, the operator of Upbit, has upgraded its market monitoring system to provide detailed trend analysis.
Bithumb has introduced measures to preemptively block unfair trading, prevent money laundering, and detect wash trading.
The FSS’s actions reflect the growing need for robust regulatory oversight in the virtual asset market, particularly as trading volumes rise and market volatility persists.
These efforts aim to improve market integrity, enhance compliance, and protect investors in an evolving financial landscape. By addressing existing gaps, the FSS seeks to ensure that virtual asset exchanges operate securely and transparently.