South Korea Integrates 19 Cryptocurrency Bills For Investor Protection

Key Points:

• South Korea passes first independent cryptocurrency bill to strengthen investor protection.
• 19 cryptocurrency-related bills integrated, imposing penalties for violations, insurance, and reserves required.

South Korea passed the first independent cryptocurrency bill to strengthen investor protection, integrating 19 cryptocurrency-related bills, including imposing penalties for violations such as the use of non-public information, market manipulation, and unfair trading practices, Insurance, reserves, and necessary record keeping are required.

South Korea’s parliament recently passed the Virtual Asset User Protection legislation to boost investor protection and regulate crypto. This legislation includes penalties for violations such as the use of non-public information, market manipulation, and unfair trading practices. The Financial Services Commission will oversee crypto operators and asset custodians, and the Bank of Korea will have the power to investigate these platforms. The act requires insurance coverage, reserve funds, and necessary record-keeping. The rules cover assets such as Bitcoin, while existing capital-markets law applies to tokens deemed securities.

The legislation comes just over a year after the implosion of tokens created by South Korean crypto entrepreneur Do Kwon exacerbated a $2 trillion crypto-market rout. Kwon was recently sentenced to four months in jail in Montenegro for trying to travel with a forged passport. He is wanted by South Korea and the US after the 2022 collapse of his TerraUSD and Luna coins wiped out at least $40 billion.

Investors were recently reminded of the risks in the digital-asset sector when two crypto lenders with links to South Korea halted withdrawals in quick succession in June. In March, a high-profile Seoul murder case linked to crypto investment losses stoked calls for politicians to accelerate new rules.

The Korea Blockchain Enterprise Promotion Association in Seoul welcomes the authorities’ attempt to build order, but they argue that the law remains stuck in the perspective of traditional finance in terms of regulating crypto, which may suppress the industry rather than promote it.

Jurisdictions around the world are stepping up efforts to regulate digital assets. Places like Hong Kong and Dubai are seeking to attract crypto investment, while the European Union recently passed its landmark Markets in Cryptoassets (MiCA) regulation. US agencies have implemented a crackdown after a string of blowups, including the FTX exchange’s bankruptcy.

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