South Korean lawmakers pass crypto bill to protect investors

Quick Take

  • New law authorizes power to impose penalties and liability for damages caused by unfair crypto trading practices

South Korean lawmakers have passed a crypto bill for imposing liability for damages and enforcing penalties in cases of unfair trading of virtual assets.

The Virtual Asset User Protection legislation outlines penalties for transgressions, such as the use of nonpublic information, market manipulation, and unfair trading practices.

The new rules give the nation's regulatory authority, the Financial Services Commission, and The Bank of Korea the power to oversee crypto operators as well as asset custodians. A list of compliance requirements is outlined, such as insurance coverage, reserve funds, and the necessity of detailed record keeping.

The legislation applies rules detailed in the nation's 'Capital Market and Financial Investment Business Act' to tokens deemed securities. According to South Korean media, violation of the new legislation is subject to imprisonment for a term not exceeding one year. The law also authorizes the power to impose fines of not less than three times but not more than five times the amount of profits gained from unfair trade.


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According to Bloomberg, Lee Suh Ryoung, chief secretary general of the Korea Blockchain Enterprise Promotion Association in Seoul, said: "The law in general remains stuck in the perspective of traditional finance in terms of regulating crypto."

The legislation comes after South Korean national Do Kwon was recently sentenced to four months in jail in Montenegro for trying to travel with a forged passport. The TerraForm Labs founder is wanted by South Korea and the U.S. after the 2022 collapse of TerraUSD and Luna, which wiped out at least $40 billion of value.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].


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