South Korea is accelerating its push toward tighter cryptocurrency oversight on February 9, and cautiously expanding financial innovation, signaling a clear “regulate first, open later” strategy.
? Korea turns up the heat on crypto in 2026 ??
Financial Supervisory Service has released its 2026 plan and it’s a big one ?
? Crackdown targets include
• Whale manipulation
• Front-running and “fencing”
• API order abuse
• False information on social media— SWFT Blockchain (@SwftCoin) February 9, 2026
The country’s Financial Supervisory Service (FSS) announced plans to introduce AI-powered monitoring systems to crack down on high-risk crypto market manipulation. The move is part of its 2026 regulatory roadmap and comes alongside preparations for the Digital Asset Basic Act, a comprehensive legal framework for the crypto industry.
AI Monitoring Targets Crypto Market Manipulation
According to the FSS, artificial intelligence and automated analytics will be used to detect suspicious trading patterns in real time. Key targets include:
Large-scale whale-driven price manipulation
Abnormal trading during exchange deposit or withdrawal suspensions
Rapid price spikes caused by coordinated buying
Market abuse via APIs or misleading information spread on social media
The AI system is designed to flag abnormal price surges within seconds or minutes, enabling faster enforcement and stronger investor protection.
Digital Asset Basic Act Moves Forward
Alongside technological upgrades, South Korea has launched a task force to prepare legislation for the second phase of crypto regulation under the Digital Asset Basic Act.
Key priorities include:
Disclosure standards for digital asset issuance and trading
Compliance and internal control guidelines for exchanges and stablecoin issuers
Clearer fee transparency and classification rules
Authorities aim to improve market transparency while creating a regulatory foundation that supports sustainable industry growth.
Limited Approval for 2x Leveraged ETFs
South Korea is not fully closing the door on innovation. Regulators recently approved limited 2x leveraged and inverse ETFs tied to domestic blue-chip stocks in an effort to bring retail investors back from overseas high-risk products.
However, strict safeguards apply:
ETFs must track baskets of at least 10 stocks
No single stock may exceed a 30% weighting
Retail investors must complete mandatory education
3x leveraged ETFs remain prohibited
A “Regulate First, Open Later” Strategy
To summarize, South Korea’s approach sends a message to their citizens: there is a cautious balance between risk control and financial innovation. By combining AI-driven oversight with gradual market opening, regulators aim to protect investors while maintaining competitiveness in the global digital asset landscape.
As major economies race to define crypto regulations, South Korea’s model is increasingly viewed as a key reference point for Asia’s financial future.
