South Korea passed its first independent digital asset law to increase investor protection, shortly after tokens produced by its compatriot Do Kwon caused a $2 trillion crypto market crash.
South Korea Passes First Independent Cryptocurrency Law After Scandals
Parliament today passed the Virtual Asset User Protection legislation after a long delay, which brings together 19 crypto-related bills.
The law defines digital assets and imposes penalties for violations such as the use of non-public information, market manipulation and unfair trading practices.
The legislation gives the Financial Services Commission the power to oversee crypto operators as well as asset custodians.
The Central Bank of Korea will also be able to investigate such platforms. The law requires insurance coverage, reserve funds, and required records to be kept.
While the rules cover assets like Bitcoin, current capital market law applies to tokens that are considered securities.
“We welcome the authorities' attempt to establish order,” said Lee Suh Ryoung, general secretary of the Korea Blockchain Enterprise Promotion Association in Seoul.
“But the law in general is stuck with the traditional finance perspective in terms of regulating crypto,” he said, adding that this could suppress rather than encourage the industry.
Back Hyeryun, chairman of the National Policy Committee in the South Korean parliament, said the new rulebook will focus on protecting investors for now and will gradually expand to provide broader oversight.
*Not investment advice.
