South Korea’s Financial Supervisory Service (FSS) is stepping up oversight of the cryptocurrency market, announcing a series of targeted investigations aimed at curbing manipulation and restoring order across digital asset trading.
The plan was outlined on Sunday as part of the regulator’s 2026 policy roadmap, signalling a tougher stance on practices that have long distorted price discovery in the local crypto market.
Focus on ‘whales,’ wash trading, and social media manipulation
According to the FSS, investigations will focus on high-risk trading behaviours that undermine market fairness. These include price manipulation by so-called “crypto whales” who move markets with large capital, as well as “gated trading” schemes where prices are artificially influenced when deposits or withdrawals are suspended on specific exchanges.
Other tactics under scrutiny include rapid price pumps driven by concentrated buying at specific times, manipulation through API-based market orders, and the spread of false or misleading information via social media channels. Regulators plan to deploy advanced monitoring tools that analyze abnormal price movements on a second-by-second basis, using AI-powered text analysis to identify suspicious trading groups and coordination patterns.
The FSS said the goal is to move beyond reactive enforcement and toward early detection of market abuse, especially during periods of extreme volatility.
Digital asset law and broader financial safeguards
Alongside market surveillance, the watchdog has launched a task force to support the rollout of South Korea’s upcoming Digital Asset Basic Act, the second phase of the country’s crypto regulatory framework. The group will help design disclosure rules for token issuance and exchange listings, as well as licensing standards for crypto firms and stablecoin issuers.
The 2026 plan also extends beyond crypto. The FSS is preparing to introduce punitive fines for major IT failures at financial institutions, strengthen cybersecurity accountability for CEOs and chief information security officers, and roll out a centralized cyber threat monitoring system across the financial sector.
Meanwhile, South Korea approved changes to its crypto licensing framework, raising the bar for companies seeking to operate in the country.
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