Korean Financial Watchdog Warns Investors Against Crypto Scams

South Korea is set to allow initial coin offerings (ICOs) next year, easing a ban on crypto fundraising that has been in place since 2017. A draft of the Digital Asset Basic Act, prepared by the Financial Services Commission, would allow domestic sales of digital assets if issuers meet disclosure requirements, the Maeil Business Newspaper reported. The measure is intended to address concerns about tokens that are initially listed on overseas exchanges before becoming available to South Korean investors. The legislation outlines tougher accountability standards for crypto issuers. Projects that provide false information or fail to disclose material details in their whitepapers ahead of an ICO could be held liable for investor losses. Liability would also extend to other parties substantially involved in an offering, including outsourced operators and market makers.Photo by Y K on UnsplashStablecoin issuers need Korean presenceSeparate provisions set out rules for stablecoins, barring tokens issued by entities without a physical presence in South Korea from domestic trading, a restriction that would apply to widely used stablecoins such as USDT and USDC. Issuers would be required to fully back stablecoins with reserves such as cash or government bonds held at banks or financial institutions and would be prohibited from paying interest to users. The proposal reflected the FSC’s position on the second phase of digital asset legislation focused on stablecoin issuers. The issue remains subject to inter-institutional debate, with the Bank of Korea pressing for a bank-led consortium model for stablecoin issuance. The ruling Democratic Party of Korea (DPK) is expected to review a consolidated bill combining proposals from the government and the National Assembly next month, with plans to advance the legislation during the regular parliamentary session in the first quarter of 2026. The FSC’s focus on consumer protection is also reflected in its plans to introduce a Digital Finance Security Act, detailed in a recent report to the presidential office. According to Digital Asset, the proposed legislation would establish rules for traditional financial institutions as well as electronic financial businesses and virtual asset service providers. The move came after a 44.5 billion won ($30 million) hacking incident last month at Upbit, the country’s largest crypto exchange. Existing regulations under the Virtual Asset User Protection Act do not contain provisions specifically covering such cases. Separately, the FSC is working to strengthen its response to emerging forms of financial crime, including transnational offenses and crypto-enabled money laundering. It said measures under consideration included adding state-level criminal organizations to the list of entities barred from financial transactions, improving anti-money-laundering (AML) rules to better align with international standards, and expanding the scope of the travel rule. On the supervisory side, the commission intends to make the Virtual Asset Division a permanent unit after initially establishing it as a temporary body, News1 reported. The Virtual Asset Inspection Division within the Financial Intelligence Unit is also set to become a standing unit. Price declines weigh on exchangesThe stepped-up regulatory focus has coincided with a broader downturn in the crypto market. Bitcoin is trading below $89,000, about 30% below its all-time high of $126,000 set earlier in October. CoinGecko data cited by IT Chosun showed average daily trading volume across South Korean exchanges falling to $2.95 billion in November from $4.41 billion in August, with trading fees accounting for about 98% of exchange revenue. The broader market weakness has also been accompanied by declines in altcoins. South Korean crypto investors attributed the recent drop in altcoin prices to capital flowing into major cryptocurrencies such as Bitcoin and Ethereum. A weekly survey conducted by CoinNess and Cratos showed that 41.7% of the 2,000 respondents cited capital concentration in leading tokens as the primary factor, followed by the growing number of altcoins at 31.6%, their limited practical value at 14.7%, and technical factors such as chart patterns at 12.1%. 

Wemade Unveils Blockchain-Powered Platform for Various CommunitiesSouth Korean gaming company Wemade today unveiled their latest creation, Wepublic, a blockchain-powered platform for various communities. The objective of Wepublic is to establish a transparent and trustworthy digital society on the WEMIX3.0 Mainnet.Photo by Pixabay on PexelsFrom political parties to NGOsInitially built as a fundraising platform, Wepublic caters to entities of any scale or domain, be it political parties, religious groups, or non-profit organizations. Wepublic is committed to transforming itself into a platform for everyone.By leveraging blockchain, Wepublic ensures that all information and records stored on the platform are transparent, making them immune to counterfeiting and diversion. Furthermore, Wepublic is dedicated to fostering inclusivity and democratic decision-making. Every member within a group on Wepublic has the ability to engage in organizational activities and contribute to fair decision-making processes.Four proof protocolsIn the near future, Wepublic will introduce the “Wepublic Wallet,” enabling users to create or participate in decentralized autonomous organizations (DAOs). To ensure transparency and reliability of DAO operations, Wepublic relies on four proof protocols. These protocols serve to verify user identities, credentials, account balances, and the outcomes of governance processes.The first protocol utilizes decentralized identifiers (DIDs) to safeguard personal information, prioritizing user privacy and security. The second protocol employs soulbound tokens (SBTs) to effectively manage groups within the platform. The third protocol provides visibility into account balances and transaction records, adding an additional layer of transparency. Lastly, the fourth protocol ensures the transparent recording of all governance processes on the blockchain, promoting accountability and trust.

SK C&C and NEAR Foundation Forge Strategic Partnership to Fuel Web3 GrowthSK C&C, the information and communications technology affiliate of the South Korean conglomerate SK Group, last week announced its strategic partnership with the NEAR Foundation, the organization supporting the NEAR Protocol blockchain, aiming to broaden its Web3 business initiatives.The partnership ceremony was held earlier this month at a hotel in Seoul and saw attendance from Choi Cheol, the Head of Web3 and Convergence Group at SK C&C, along with Marieke Flament, the CEO of the NEAR Foundation.NEAR Protocol is a layer 1 blockchain that enables enterprises to build private shards that can be connected to the public blockchain.Photo by Shubham Dhage on UnsplashBlockchain research and global marketingThrough this agreement, the two companies will establish a mutual support system to strengthen their business networks, cooperate on research and business projects related to blockchain technology, spanning all industries, and execute global marketing strategies to elevate their brands and accelerate the Web3 ecosystem.SK C&C’s ChainZ and NEAR ProtocolAs part of this initiative, the two sides seek to link SK C&C’s own blockchain platform, ChainZ, with NEAR Protocol to develop a Web3 market that supports both public and private blockchains. Focusing on the financial infrastructure sector, SK C&C aims to inject momentum into its ventures in domains like the sharing economy market — a flourishing ground for second-hand item trading platforms — and in the gaming, content, and commerce sectors, where the issuance of non-fungible tokens (NFTs) is expected.Tailored corporate solutionsThey will delve into the development of Web3 solutions tailored for corporations, concentrating on areas like supply chain management and enterprise resource planning (ERP). ChainZ’s Key Recovery System will play a pivotal role in enhancing security and simplifying account management, while NEAR Protocol will support high transaction speeds, scalability, and interoperability between multichains.For example, assets like inventories, orders, loans, and bills of lading can be marked with tokens based on NEAR Protocol. These can then be verified at each stage of an entire trade process through digital signatures recorded on ChainZ.Moreover, SK C&C will leverage the NEAR Foundation’s global network as a stepping stone for global market entry, while NEAR Protocol will utilize the business network of SK C&C to garner customers in the Korean market. This effort to expand NEAR’s presence in South Korea also aligns with its joining hands with Dongdaemun, an administrative district in Seoul, earlier this month.SK C&C’s Choi Cheol underscored the efforts underway across various industrial sectors, including public, finance, manufacturing, and commerce, to develop Web3 services driven by public blockchains. He stated that beginning with NEAR Protocol, SK C&C would intensify collaborations with different public blockchain projects to broaden the ecosystem for Web3 services.