Key takeaways:
- The Act governing virtual asset user protection was approved by the National Assembly in South Korea.
- The primary goal of the Virtual Asset User Protection Act is to apply the Capital Market Act first to virtual assets that are similar to securities.
By implementing a new cryptocurrency law, the South Korean government is taking action to safeguard cryptocurrency investors against implosions like Do Kwon’s Terra ecosystem.
The National Assembly approved the Act governing virtual asset user protection on June 30. According to the local news outlet Blockmedia, the measure aims to protect cryptocurrency investors by regulating unethical business practices.
Virtual assets are defined under the law’s first provision. Digital tokens with economic value that may be traded or transferred are referred to as virtual assets. The term “virtual assets” does not include Central Bank Digital Currency (CBDC).
According to reports, the proposal combines 19 crypto-related acts, creating a unitary bill that defines digital assets and imposes fines for illegal trading practices such as exploiting secret information, manipulating the market, and other unfair trading practices in the cryptocurrency industry.
According to local media, the primary goal of the Virtual Asset User Protection Act is to apply the Capital Market Act first to virtual assets that are similar to securities. The Act also attempts to create a foundation for imposing fines and accountability for losses brought on by unfair cryptocurrency trading.
Virtual asset service providers (VASPs) in South Korea are apparently now required to assume responsibility for users’ deposits and offer insurance in order to protect investors. Such precautions are required to guarantee user security against hacking, computer malfunctions, and other threats.
A fixed-term prison sentence of at least one year or a significant fine may be imposed for breaking the new guidelines. For gains made through unfair trading, the Financial Services Commission, for instance, has the authority to levy a fine twice that amount.
The news came shortly after Do Kwon, the founder of Terraform Labs, was convicted guilty of using a counterfeit passport and given a four-month prison sentence by a court in Montenegro. The executive is also wanted in South Korea on suspicion of breaking the nation’s capital markets law.
According to recent claims made by South Korean authorities, Terra’s token crash is the biggest financial fraud or financial securities fraud case to have ever occurred in the nation.
Recently, legislation officially identifying cryptocurrency as a regulated financial activity in the UK was also passed. The Financial Services and Markets Act 2023 is now officially a law after receiving royal assent and King Charles’ approval on Thursday. According to the government, the Act is “central” to its goals of boosting the economy and creating a competitive, open, and sustainable financial services sector.
