Key Takeaways:
- The South Korean Financial Services Commission will implement the Virtual Asset User Protection Act starting July 19.
- Criminals making over $3.8 million in illegal crypto profits face life sentences in South Korea.
South Korea’s Financial Services Commission (FSC) has announced stringent measures to combat crypto-related crimes, including market manipulation and illegal trading.
According to local media reports, the new regulations, set to take effect on July 19, will impose criminal penalties, including life imprisonment, on crypto criminals engaging in illicit market activities.
The regulations, outlined in the Enforcement Decree of the Virtual Asset User Protection Act and the Virtual Asset Industry Supervision Regulations, aim to enhance investor protection and prevent financial crimes in the virtual asset space.
Under the proposed regulations, market manipulation, illegal trading, and the use of undisclosed important information regarding virtual assets will be strictly prohibited. Additionally, business owners of crypto exchanges will be required to store a minimum of 80% of customers’ deposits in cold wallets, which are considered more secure against cyber threats as they are not consistently connected to the internet.
To further safeguard users’ assets, virtual asset exchanges must either acquire insurance coverage or set aside reserves equivalent to over 5% of the total economic value of virtual assets stored offline.
All businesses falling under this category are required to adhere to the act. If a violation of the law is detected, the Financial Services Commission may take actions such as suspending business operations, issuing correction orders, filing complaints, or notifying investigative agencies against the owners.
These measures are designed to mitigate potential losses and protect users’ assets in the event of hacking or system failures.
The FSC will oversee compliance with the new regulations, conducting routine inspections of virtual asset business operators to ensure adherence to the rules.
The Financial Supervisory Service (FSS), South Korea’s chief financial regulator, has sought advice from the U.S. Securities and Exchange Commission (SEC) to enhance regulatory measures in the crypto industry.
In addition to regulatory efforts, South Korea’s Ministry of Personnel Management has announced a new policy requiring high-ranking public officials to disclose their cryptocurrency holdings, reflecting the government’s commitment to transparency and accountability in the crypto space.
These regulatory measures underscore South Korea’s proactive approach to tightening regulation in the crypto industry and protecting investors from financial crimes.
