The financial regulator said Wednesday it has approved the establishment of a new nonprofit organization that will help protect virtual assets of consumers at cryptocurrency exchanges going out of business.

The organization, tentatively named digital asset protection foundation, will also work to safely return virtual assets at defunct exchanges to their rightful owners, according to the Financial Services Commission (FSC).

A client looks at an electronic signboard at a cryptocurrency exchange in Seoul, in this file photo taken Feb. 29, 2024. (Yonhap)

A client looks at an electronic signboard at a cryptocurrency exchange in Seoul, in this file photo taken Feb. 29, 2024. (Yonhap)

The FSC said it has been “tirelessly working to ensure the safe return of assets to users in case a cryptocurrency exchange closes business or is shut down.”

“However, there exist concerns over the protection of assets as the return process often takes an extended period of time due to failures to contact the operators of (close
d) exchanges or users failing to claim their assets,” it added.

So far, 10 out of 22 cryptocurrency exchanges in the country have shut down their business, while three others have at least temporarily suspended their operations, the FSC said, also noting “difficulties” in expecting such businesses to continue spending resources to protect and safely return virtual assets of their customers.

Against such a backdrop, the Digital Asset eXchange Association (DAXA) has been pushing to launch an organization to help protect virtual assets of users at defunct exchanges.

The financial regulator said the envisioned organization may be launched as early as next month.

“The establishment of the foundation is expected to help users to safely protect their assets, while also helping to minimize confusion in the market following the shutdown of an exchange,” it said.

Source: Yonhap News Agency