<p>During a recent criminal law seminar held at the Supreme Prosecutors’ Office, Park Min-woo, Director of the Capital Markets Bureau at the South Korean Financial Services Commission (FSC), underscored that starting next year, virtual asset service providers (VASPs) will no longer be permitted to offer deposit and management services for virtual assets. That’s according to a report by local crypto news outlet <a href="https://www.digitalasset.works/news/articleView.html?idxno&#61;4237" rel="noopener noreferrer nofollow">Digital Asset</a>.</p><p>This is seen as a response to the suspension of virtual asset deposits and withdrawals carried out by virtual asset yield platforms Haru Invest and Delio a few months ago.</p><h2 id="header-0">Legal background</h2><p>Director Park referred to Article 7, Paragraph 2 of <a href="https://medium.com/&#64;coinness.gl/koreas-virtual-asset-user-protection-act-to-take-effect-in-july-next-year-d3df61766cd6" rel="noopener noreferrer nofollow">the Virtual Asset User Protection Act</a>, clarifying that the intention behind this provision is to ensure that VASPs have the ability to fulfill asset withdrawal requests, even in the scenario where all their customers make such requests. This Act is scheduled to go into effect in July of next year, and Article 7 prohibits VASPs from entrusting customer assets to third parties.</p><p>Deposit service providers receive cryptocurrency deposits and then distribute the resulting yields to their customers. In a bull market, these entities can manage yields on their own. However, in a flat or bear market, these asset managers may face challenges in paying yields unless they can generate profits by handing over customer assets to external custodians.</p><h2 id="header-1">Signs of giving up</h2><p>In fact, centralized finance (CeFi) company HeyBit made an announcement last month, stating that it will <a href="https://medium.com/&#64;coinness.gl/heybit-to-cease-virtual-asset-deposit-services-in-october-743ad9e968c2" rel="noopener noreferrer nofollow">discontinue its virtual asset deposit service</a> starting from October 2. They cited this specific provision as the reason for their decision.</p><h2 id="header-2">Fraud charges</h2><p>Both Haru and Delio have been indicted by the Seoul Southern District Prosecutors’ Office on fraud charges.</p><p>As an unregistered VASP, Haru suspended its deposit and withdrawal services on multiple occasions in June, causing substantial financial losses to numerous investors. This suspension was triggered by significant losses incurred at B&amp;S Holdings, another unregistered entity to which Haru had entrusted virtual assets.</p><p>Similarly, Delio, although registered, entrusted a considerable amount of virtual assets to Haru and Traum Info Tech but was unable to recover them.</p>

Korea to Ban Virtual Asset Deposit Services from Next July

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