New Crypto Legislation Passed in South Korea in Response to Terra Collapse
South Korea has taken decisive action to protect investors in the wake of the collapse of Do Kwon’s Terra empire. The government has passed the Virtual Asset User Protection Act, a groundbreaking piece of legislation aimed at safeguarding investors from catastrophic events in the crypto market. This new law, which gained swift approval in the National Assembly on June 30, addresses concerns about unfair trading practices and establishes a safer environment for crypto investors in South Korea.
The Importance of the Virtual Asset User Protection Act
The Virtual Asset User Protection Act is a significant milestone in South Korea’s commitment to protecting its citizens in the rapidly evolving world of cryptocurrency. The collapse of the Terra empire was deemed by South Korean prosecutor Dan Sunghan as “…the largest financial fraud or financial securities fraud case that has ever happened in South Korea.” This highlights the urgency and necessity of the legislation.
The Scope of the Act
The Virtual Asset User Protection Act is a comprehensive piece of legislation that consolidates 19 separate crypto-related bills. It provides a clear definition of digital assets and establishes a legal framework for penalizing illicit trading activities. These activities include the use of undisclosed information, market manipulation, and other deceptive practices that have been plaguing the crypto world.
The Act also imposes limitations on the trading of self-issued virtual assets by virtual asset operators, prevents unauthorized blockage of deposits and withdrawals of virtual assets, monitors the virtual asset market for abnormal transactions, and takes appropriate measures to address them.
Capital Market Act and Fines for Unfair Crypto Trades
A key focus of the Virtual Asset User Protection Act is the application of the Capital Market Act to digital assets that bear the characteristics of securities. This ensures that fines or liability for losses resulting from unfair crypto trades can be enforced. The Bank of Korea is empowered to oversee platforms and digital assets suspected of engaging in such activities.
The Act also mandates that virtual asset service providers (VASPs) in South Korea take responsibility for user deposits, maintain detailed records, and provide insurance. Non-compliance with these requirements can result in a prison sentence of at least one year or hefty fines.
User Protection Measures
The Virtual Asset User Protection Act is designed to establish robust investor protection in South Korea. It sets up a safety net for users against potential risks such as hacking or computer glitches. The Financial Services Commission has the authority to impose penalties that are twice the amount of profits made from unfair trading, further enhancing user security.
Editor Notes: Uber Crypto News
South Korea’s new Virtual Asset User Protection Act is a positive step towards a safer and more regulated crypto market. It demonstrates the government’s commitment to protecting investors and holding those engaging in unfair trading practices accountable. To stay updated with the latest crypto news, make sure to visit Uber Crypto News.