South Korea will see its one-year grace period for the Virtual Asset User Protection Act end this month. With the end of this window period, two important developments are set to change crypto regulations as the country’s citizenry knows it.

As the country’s regulatory climate toughens this month, crypto market recovery could slack amid reduced trading volumes.

Crypto Regulation Shake-Up: New Laws in South Korea

South Korea’s lawmakers passed the Virtual Asset User Protection Act in July 2023, allowing a one-year grace period before implementation. Local media reported that the legislation would be divided into two parts, with the first due on July 19. The second part remains a work in progress.

Under this legislation, the Financial Services Commission (FSC), South Korea’s regulatory body, and the Bank of Korea would jointly oversee crypto operators and asset custodians in the country. According to an official statement from the FSC, the objective is to prevent illicit market activity.

Crypto exchanges would also have to safeguard at least 80% of deposits in cold storage and enroll in insurance programs. These measures will guarantee the safety of user funds, with a capacity for compensation in case of security breaches.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

As the one-year window expires this month, South Korea is meeting the expiry of this grace period with new technology. In a Thursday announcement, South Korea’s Financial Supervisory Service (FSS) said it would launch a 24-hour surveillance system for local exchanges on July 19. The deployment will happen as the Virtual Asset User Protection Act is enacted.

The Financial Supervisory Service (FSS) has developed a standardized reporting format by benchmarking the Korea Exchange. This system analyzes data submissions from local exchanges, identifying and removing irregularities from transaction reports.

“We benchmarked KRX’s (Korea Exchange) criteria in extracting abnormal transactions and prepared models and metric indicators through several simulations, which we expect will filter out abnormal transactions meticulously,” read an excerpt in a press release shared on Thursday.

Notably, the FSS employs the help of exchanges, who will monitor suspicious transactions and uncover illegalities. There is also a hotline between local exchanges and the FSS to report violations.

Implicantions for Crypto as Exchanges Ramp Up

Meanwhile, exchanges ramp up their activities to beat the July 19 window. Bithumb, the second largest exchange in South Korea, launched the ICP Korean Won trading market on June 12. Others are reevaluating over 1,000 previously listed tokens, with the Digital Asset eXchange Alliance (DAXA) informing local users of plans to join 20 other local exchanges in reviewing 1,333 tokens.

The DAXA is an alliance that represents five major Korean crypto exchanges. This will help get ahead of possible delisting once the Virtual Asset User Protection Act’s axe falls. 

These regulatory adjustments sprouted from the TerraUSD and Luna saga in 2022, revolving around South Korean national Do Kwon.

Read More: Terra (LUNA) Price Prediction 2024/2025/2030

As crypto markets continue to bleed, some say the toughening of regulations in South Korea could delay price recovery. The speculation sprouts from the Korean won position against the US dollar (USD) as the most commonly used currency for crypto trading.

While this competition solidifies South Korea’s position in the global crypto arena, it qualifies as a factor in the much-awaited market recovery as the country’s regulatory climate heats up. As traders and exchanges navigate this development, trading volumes are expected to drop, especially among major trading platforms, making the market more susceptible to sharp price movements and heightened volatility.

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Hamilton, a startup specializing in real-world asset (RWA) tokenization, has announced the tokenization of the first US Treasury bills on Bitcoin layer-2 (L2) solutions, including Stacks, Core, and BoB.

This milestone signifies a major step towards integrating traditional finance with the Bitcoin ecosystem, enhancing the accessibility and tradability of stable, government-backed assets within decentralized finance (DeFi) networks.

Bridging Finance: Treasury Bills on Bitcoin Layer 2 Solutions

According to the official statement, Hamilton conducted the inaugural transaction on America’s Independence Day. Hamilton’s initiative seeks to make financial instruments like Treasury bills more accessible and tradable within Bitcoin’s DeFi ecosystems.

“Combining US Treasury bills with Bitcoin’s security and transparency marks a historic step towards financial independence, providing crucial exposure to emerging markets,” Kasstawi, CEO & Co-founder of Hamilton, said.

Read more: What is Tokenization on Blockchain?

Hamilton’s tokenized Treasury bills will be available on three prominent Bitcoin L2 solutions: Stacks, Core, and BoB. These platforms are well-known for making Bitcoin more scalable and functional.

Therefore, they will allow Hamilton to easily and affordably create digital tokens representing real-world assets—all while ensuring the security that Bitcoin is famous for. The tokenized Treasury bills are expected to be available soon on Hamilton’s platform.

Hamilton’s move matches the increasing interest in RWA tokenization from both crypto firms and traditional financial institutions. Boston Consulting Group’s (BCG) projection of the RWA market to reach $16 trillion by 2030 highlights the potential of such innovations.

Additionally, the latest data from RWA.xyz indicates that the total value of tokenized treasuries as of July 4 is $1.79 billion. The figure represents a 215.88% year-on-year increase from $566.67 million. This surge highlights the growing demand and potential for RWA tokenization in the financial sector.

RWA tokenization involves creating digital representations of tangible assets like bonds, real estate, and debt on blockchain networks. Once tokenized, these assets can be swapped, transferred, and leveraged in DeFi ecosystems.

Read more: What is The Impact of Real World Asset (RWA) Tokenization?

This method creates new opportunities and liquidity between traditional and crypto assets. Furthermore, it enhances transparency, liquidity, security, and accessibility while reducing costs and transaction times.