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South Korean financial authorities are stepping up regulation of offshore perpetual contracts, cracking down on illegal marketing to domestic clients and referring violations to prosecutors.

55 minutes ago

South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) have issued an investor alert on perpetual contracts traded on overseas virtual asset platforms. The authorities said they will step up monitoring of overseas platforms offering perpetual contracts linked to South Korean stocks, indices, and other assets. If illegal domestic operations such as soliciting South Korean residents to open accounts or trade are confirmed, they will take stern measures including filing complaints with investigative agencies, and demand that major relevant overseas platform operators comply with South Korean laws. South Korean authorities noted that these perpetual contracts have no expiration date, trade 24/7, and some products offer leverage of 10x to 200x. Taking a 150x-leveraged contract linked to South Korean stock indices as an example, a 0.66% reverse index fluctuation can trigger forced liquidation. Such products are not legally permitted in South Korea. Most overseas platforms are not subject to South Korean financial laws. In cases of bankruptcy, closure, unilateral trading suspensions, or system failures, resolving domestic disputes and providing investor relief becomes challenging, and domestic regulators also struggle to verify client asset custody. The authorities said they will carefully assess whether to introduce similar products domestically and the corresponding regulatory framework.

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