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.
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.
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