South Korea to Implement Virtual Asset User Protection Act
The Financial Services Commission (FSC) in South Korea is introducing the “Virtual Asset User Protection Act” on July 19, 2024. The aim is to safeguard digital asset users, prevent unfair trading practices, and grant financial authorities the power to supervise and sanction virtual asset markets and operators.
Stringent Measures for Virtual Asset Business Operators
Under the new legislation, virtual asset business operators will be required to securely protect users’ deposits and crypto assets. Banks will act as managing institutions for these deposits. Additionally, operators must store a certain percentage of users’ crypto assets offline to enhance protection.
The legislation also prohibits activities such as market manipulation and illegal trading, with violators facing criminal punishment or fines. In extreme cases involving illegal profits exceeding 5 billion won ($390,000), life imprisonment may be imposed.
Enhancing Oversight and Collaboration
To ensure a smooth implementation of the Virtual Asset User Protection Act, financial authorities are establishing infrastructure for supervision and investigation tasks. Dedicated departments have been set up within the Financial Supervisory Service, and crypto businesses will receive regulatory roadmaps and checklists to fulfill their obligations under the law.
The FSC is actively collaborating with investigative agencies to ensure strict punishments for illegal activities in the crypto market. The Financial Supervisory Service Reporting Center has been expanded and reorganized to detect illegal activities swiftly.
Finalizing Implementation
The FSC will review feedback received during the legislative notice period for the Enforcement Decree of the Virtual Asset User Protection Act and the Virtual Asset Industry Supervision Regulations. The final enforcement date will be announced after a review by the Ministry of Government Legislation.
Hot Take: South Korea Strengthens Crypto Regulations to Protect Users
South Korea is taking significant steps to safeguard digital asset users and establish order in the crypto market. The implementation of the Virtual Asset User Protection Act will ensure the secure storage of users’ assets and prohibit unfair trading practices. By granting financial authorities the power to supervise and sanction virtual asset markets and operators, South Korea aims to create a safer environment for crypto investors. The country’s commitment to strengthening oversight and collaboration with investigative agencies demonstrates its determination to combat illegal activities in the crypto space. These robust measures will help build trust and confidence in the South Korean crypto market.
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