Key Points

  • South Korea has introduced a basis for imposing penalties and liability damages caused by unfair crypto trading.
  • The bill is motivated by actions from collapsed crypto empires like Terra Luna.

A crypto regulation bill has been introduced in South Korea to protect its citizens from the exploitation of unfair cryptocurrency trade practices. The bill, Virtual Asset User Protection Act, was passed by the country’s National Assembly and is designed to provide more protection to South Koreans from illicit trading activities like undisclosed information and advertising, market manipulation, and other notable unfair practices.

South Korea welcomes a crypto regulation bill imposing penalties and liability damages on unfair crypto trades

The Virtual Asset User Protection Legislation reportedly integrates about 19 crypto regulation bills providing a unified one that can serve South Korean investors better. This crypto regulation bill comes after the country was previously used by Do Kwon’s Terra Labs as a host market, only for his crypto empire to collapse due to poor management.

As such, it was expected that South Korea would act harshly on Do Kwon and impose strategies to prevent such an occurrence from ever happening again. According to local media, the main point of the Virtual Asset User Protection Act is to introduce the Capital Market Act fort to digital assets that have a securities nature. It also aims to establish a basis to impose liability and penalties for damages from unfair crypto trades.

Following the bill’s passing, Virtual Assets Providers (VASPs) in the country are now required to take responsibility for user deposits and provide insurance. This measure will make it safer for users against losses resulting from faulty management like hacks and other related risks. Violating the rules and requirements for crypto assets services providers in the region will attract imprisonment of at least a year or major fines.

In other news, the UK has recognized cryptocurrencies as regulatable assets. These developments come shortly after the passing of the MiCA legislation. The country is also preparing to introduce MiCA towards the end of 2024, as the EU parliament requires. Keep watching Fintech Express for stories on crypto regulation and other fintech-related developments.