Last Updated: December 17, 2024
• South Korea has passed the first Virtual Asset User Protection Act to strengthen crypto regulation and shield investors from fraud.
• The Financial Services Commission will monitor crypto operators and custodians, while the Bank of Korea may investigate such platforms.
• Penalties for breaking the new regulations include mandatory minimum sentences of at least one year in jail and/or hefty fines.
South Korea Approves Crypto Regulatory Bill
South Korea has enacted its first independent virtual asset law on Friday, with the purpose of strengthening crypto regulation and shielding investors against mishaps like Terra-LUNA. Dubbed as “Virtual Asset User Protection Act”, the law consolidates 19 pieces of crypto-related legislation including definitions of digital assets, penalties for offences, and expanded authority for the Financial Services Commission (FSC).
Rules Governing Cryptocurrencies
The law provides groundwork for sanctions and accountability for damages resulting from unfair crypto trading. On one hand, The FSC will monitor crypto operators and custodians while on another hand, the Bank of Korea may investigate such platforms. Rules also apply to cryptocurrencies like Bitcoin, while tokens classified as securities are governed by Capital Markets Act. Penalties for breaking these rules include mandatory minimum sentences of at least one year in jail or hefty fines equal to double that amount of gains made through unfair trading.
Global Crackdown On Crypto Sector
At a time when cryptocurrency sector is facing regulatory hurdles elsewhere notably in United States , South Korean government has come up with this act to protect users from any kind of frauds and limit unfair trades . This act was approved by Political Affairs Committee of Korean National Assembly in May , followed by Judicial Affairs Committee clearing it on June 29th .
Bitcoin Supply On Exchange Drops To Record Low
Recently , Bitcoin supply on exchange has dropped to its lowest level since 2016 . This is seen as an indication that more people are holding their bitcoins rather than selling them off instantly . According to reports , some long term holders have started buying bitcoin again after a significant price drop earlier this month .
Conclusion
The Virtual Asset User Protection Act is a step towards better regulating cryptocurrency markets in South Korea amid global crackdowns taking place elsewhere . It aims to provide investors with assurance against possible financial losses caused due to scams or frauds .
