Upbit Issues First Public Disclosure Under New User Protection Act

Upbit Exchange, Korea’s largest digital asset trading platform, issued its first public disclosure on July 18. This comes as the country steps into a new regulatory era based on implementing the Virtual Asset User Protection Act.

The first part of the new legislation goes into effect on Friday, bringing crypto operators and asset custodians in the country under the purview of the Financial Services Commission (FSC) and the Bank of Korea would jointly oversee.

Upbit Exchange New Rules: Virtual Asset Trading Restrictions

Marking its first public disclosure in the domestic virtual asset industry, Upbit published its Transparency Report on July 18. With it, the exchange established a market surveillance system — Upbit Market Monitoring System (UMO) — to prevent price manipulation. It has also restricted trading by employees and their families.

 “Dunamu [which operates the virtual asset exchange Upbit] has restricted virtual asset trading and exchange within Upbit. This includes direct blood relatives of executives and employees, to maintain fair trading order and increase investor trust,” read the report .

As the exchange looks to comply with the Virtual Asset User Protection Act , the report highlights efforts to curb insider trading, price manipulation, and unfair trading. It also pushes for streamlined Know Your Customer (KYC) operation status, Upbit transaction support policies, and personal information protection status.

Read more: 17 Best No KYC crypto exchanges: Top Choices in 2024

Upbit is at the helm of Korea’s digital asset trading, alongside others like Bithumb and CoinOne . This success stems from Korea’s clear regulatory framework, including the Virtual Asset User Protection bil l. Unlike the US, where major players struggle with regulatory challenges , Korean exchanges thrive under defined guidelines.

Nevertheless, Upbit’s success has not been without controversy. On multiple occasions, Upbit has topped spot volume metrics, particularly for altcoins, which has raised concerns about market manipulation.

In 2023, for example, the StormX (STMX) token fluctuated violently , rising and falling to extremes as wide as 45%. Researchers cited Upbit as the main force behind the STMX spot, which reached $495 million and accounted for 72% of trading volume.

CryptoQuant CEO Ki Young Ju cited Korean crypto traders for their tendency to engage in pumping and dumping altcoins. In 2021, he called out South Korea’s stringent capital controls as one of the drivers, sometimes with government officials involved .  

“It happens because South Korea has very strict capital controls, blocking arbitrage opportunities between global exchanges. Korean gov’t is going to make this problem even worse with the travel rule solution, which makes Korean exchanges even more isolated,” Ki Young Ju noted .

Read more:  Which Are the Best Altcoins To Invest in July 2024?

In addition, traders tend to exploit the Kimchi premium , a price gap between South Korean and overseas exchanges.