South Korea’s Financial Services Commission and Financial Supervisory Service issued an investor alert on Oct. 16 covering perpetual contracts traded on offshore virtual asset platforms, with a focus on products tied to Korean stocks and stock indexes. The authorities said they will intensify monitoring of overseas platforms offering these instruments and may take tough action if they confirm illegal business conduct inside South Korea, including soliciting local residents to open accounts or trade. Measures could include filing complaints with investigative authorities. Regulators also said they will ask major offshore platform operators involved to comply with Korean law. In the notice, authorities highlighted the structure and risks of these products: perpetual contracts have no expiry date, trade around the clock, and in some cases offer leverage ranging from 10x to 200x. Using a product linked to a Korean stock index with 150x leverage as an example, they said an adverse move of about 0.66% could trigger forced liquidation. South Korea said such products are not permitted under its domestic system. The authorities also warned that many offshore platforms fall outside Korean financial law, making dispute resolution, investor relief, and oversight of customer asset custody difficult if platforms go bankrupt, shut down, halt trading unilaterally, or suffer system failures.
South Korea’s Financial Services Commission (FSC) and Financial Supervisory Service (FSS) issued an investor alert on Oct. 16 on perpetual contracts traded on offshore virtual asset platforms.
The regulators said they will strengthen monitoring of overseas platforms offering perpetual contracts tied to Korean stocks and stock indexes. If authorities confirm illegal business conduct inside South Korea, including solicitation of Korean residents to open accounts or trade, they said they will take tough measures, including filing complaints with investigative authorities. The agencies also said they will ask major offshore platform operators involved to comply with Korean law.
According to the alert, these perpetual contracts have no expiration date and trade 24 hours a day. Some products offer leverage ranging from 10x to 200x. Using a product linked to a Korean stock index with 150x leverage as an example, the authorities said a move of about 0.66% in the opposite direction could lead to forced liquidation. South Korea said such products are not allowed under the country’s domestic system.
The regulators also said many offshore platforms are not subject to Korean financial law. In cases of bankruptcy, business suspension, unilateral trading halts, or system failures, resolving disputes in South Korea and providing investor relief can be difficult. They added that domestic regulators also face limits in verifying how customer assets are being held.
The authorities said they will carefully assess whether similar products should be introduced domestically and what regulatory framework would apply.
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