The South Korean Parliament has passed its first independent digital-asset bill to promote investor protection. The Virtual Asset User Protection legislation integrates 19 crypto-related bills, defining digital assets and stipulating penalties for violations.
According to a local South Korean news outlet, violating the new rules will result in a minimum fixed-term imprisonment of one-year or significant fines. The violations include the use of non-public information, market manipulation, and illicit or unfair trading practices.
In accordance with the legislation, the Financial Services Commission now has the authority to oversee crypto operators and asset custodians. Additionally, the Bank of Korea would be empowered to investigate such platforms. These rules primarily apply to digital assets like Bitcoin, while tokens classified as securities are already subject to existing capital markets law.
Lee Suh Ryoung, chief secretary general of the Korea Blockchain Enterprise Promotion Association in Seoul, commented that this move is an effort by the authorities to establish order. However, he expressed his belief that the regulation of crypto is still rooted in a traditional finance perspective. Moreover, he suggested that the industry might face suppression rather than promotion.
While the new rulebook primarily emphasizes investor protection, Park Hyeryun, chair of the National Policy Committee at the South Korean parliament, stated that it will eventually encompass broader oversight.
Prior to the bill’s passage, a South Korean national, Do Kwon was sentenced to four months in jail in Montenegro for using a forged travel passport. Moreover, South Korea alleges that the collapse of Do Kwon’s Terra was the largest financial securities fraud in the country.
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