Virtual Asset Exchanges Face Tougher Security Rules
Virtual Asset Service Providers will be mandated to secure information technology safety equivalent to that of traditional financial companies, and a pathway will be opened for exchanges to preemptively block deposits and withdrawals even at the stage where a hacking incident is suspected.The Financ
The Financial Services Commission has announced plans to enforce stricter security regulations for virtual asset exchanges. At a meeting on November 12, Vice Chairman Shin Jin-chang emphasized the need for virtual asset service providers to have security measures on par with traditional financial institutions. The meeting, attended by various exchanges and service providers, aimed to address the growing security concerns within the virtual asset industry.
The Financial Services Commission plans to include provisions in the Digital Asset Act that requires digital asset service providers to meet IT safety and damage compensation obligations equivalent to those of traditional financial companies. However, as the law is still in draft form, the authorities are implementing interim guidelines to address security issues immediately.
These guidelines mandate that virtual asset service providers maintain a dedicated security team that operates round-the-clock and implement immediate measures to control suspected hacking incidents.
In addition to strengthening security, the authorities propose measures to manage cold wallets, which are offline storage for virtual assets, and limit the amount of assets stored in online-connected hot wallets. This is to ensure that in the event of a hacking incident, there are sufficient funds to compensate affected users. To facilitate compensation, the insurance compensation limits and reserve accumulation amounts are being increased.
Service providers are also required to expand their IT and information protection personnel and facilities, as well as establish technical, managerial, and physical safety standards.
A new incident reporting system will be established, which requires virtual asset service providers to immediately inform financial authorities of any infringement incidents or suspected incidents. The authorities plan to promote membership in the Financial Security Institute and support security inspections for small and medium-sized virtual asset service providers.
Currently, only five exchanges have become members of the institute due to factors like user scale and membership fees. The authorities aim to onboard the remaining providers by considering their usage scale and providing resources such as infringement threat information sharing, security vulnerability inspections, and specialized financial security training.
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