PiCK

"FSC reviews separating crypto exchange 'brokerage and custody' functions…reports to National Assembly"

Minseung Kang

Summary

South Korea’s financial authorities said they are reviewing institutional reforms for virtual asset exchanges, including separating brokerage and custody functions.
The Financial Services Commission said it reported to the National Assembly that it would consider redesigning exchanges’ functions and scope of business in line with legislative precedents in major countries.
The FSC said it is focusing on a plan to separate the custody business into a standalone line of business, and will review whether to introduce it during the second phase of legislation.

Forecast Trend Report by Period

South Korea’s financial authorities are reportedly reviewing institutional reforms for virtual asset (cryptocurrency) exchanges, including whether to separate brokerage and custody functions. The aim is to overhaul the current structure in which exchanges simultaneously perform brokerage, custody and settlement functions.

According to Rep. Park Sang-hyuk’s office of the Democratic Party of Korea on the National Assembly’s Political Affairs Committee on the 17th, the Financial Services Commission (FSC) reported to the National Assembly that it would review plans to redesign exchanges’ functions and scope of business in line with legislative precedents in major countries.

The FSC is focusing in particular on a plan to separate the custody business into a standalone line of business. While it is common in South Korea for exchanges to also hold customers’ assets, the FSC said it will examine the need to introduce such a system, given that specialized custodians exist.

Meanwhile, the FSC plans to review whether to introduce a custody business during the second phase of legislation, drawing on overseas regulatory cases.