FSS: "Crypto market cap down, users up"…steps up probe into unfair trading

South Korea’s Financial Supervisory Service (FSS) said that while the number of users in the domestic virtual asset (cryptocurrency) market is rising, the overall market size is trending lower, and signaled it will strengthen market surveillance and its supervisory framework.

On the 4th, Choi Kang-seok, head of the FSS Virtual Asset Supervision Bureau, presented recent market trends and supervisory plans at the 2026 FSS supervisory briefing, saying, “We plan to strengthen supervision and investigative systems to establish market order and foster a trustworthy virtual-asset ecosystem.”

Describing recent conditions, Choi said, “Since October 2025, prices of major virtual assets have fallen sharply due to factors such as global macroeconomic uncertainty.” He added, “Bitcoin is down about 46% from its October 2025 peak, and major altcoins such as Ethereum have also declined by around 40–60%.” He continued, “As of end-June 2025, the domestic virtual-asset market capitalization stood at about KRW 95.1 trillion, down 11.7% from the end of the previous year, while the number of users rose 11% to about 10.77 million.”

Choi stressed that as the market has grown rapidly, it needs qualitative growth, including internal controls and system stability. “In the securities market, functions are dispersed among exchanges, settlement institutions and securities firms, enabling mutual checks and balances, but in the virtual-asset market, multiple functions are concentrated in operators, leaving structural stability vulnerable,” he said. “There is a need to strengthen IT system stability and internal-control frameworks.”

Accordingly, the FSS plans to push ahead with building a supervisory framework in preparation for the second phase of digital-asset legislation. The Basic Act on Digital Assets, currently under discussion in the National Assembly, is expected to include finer classification of operator types, regulation of business conduct, a framework for listing support and disclosures, and rules against unfair trading. For stablecoins, requirements for issuance, management of reserve assets and monitoring systems are also key items under discussion.

The FSS said it established a “Preparatory Task Force for Introducing the Basic Act on Digital Assets” in January this year to prepare for the new regime, and plans to advance work on a disclosure framework related to virtual-asset issuance and listing support, as well as procedures for licensing operators. It will also inspect internal controls and the operational status of IT systems at won-denominated exchanges, and proceed with revisions to self-regulation and system improvements reflecting identified vulnerabilities.

It will also strengthen its unfair-trading surveillance framework. Through market monitoring, the FSS plans to screen targets with a high likelihood of unfair trading such as price manipulation, and conduct thematic investigations in high-risk areas such as price adjustments in the early circulation stage and trading using API orders. It will also develop functions using an AI-based analytics system to automatically detect groups suspected of price manipulation, and will establish separate review criteria related to API trading to bolster exchanges’ market-surveillance capabilities.

Choi said, “For the virtual-asset market to grow in a stable manner, user protection and the establishment of market order are essential,” adding, “Supervisory authorities will also strengthen market monitoring and investigative capabilities to build a sound market environment.”