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  • Writer's pictureJamal Saafir

South Korea Heating Things Up In Crypto Legislation

After the turmoil caused by cryptocurrency Terra Luna’s collapse in May of 2022, protection for crypto investors took a front seat for many governments affected by the fallout. One of those countries being South Korea. South Korea is the birthplace and home of failed Terra Luna co-founder Do Kwon, which makes that failure sting a bit more. South Korea has been waiting to get its hooks into Do Kwon due to alleged violations of the nation’s capital markets law, but will have to wait in line, as he is currently in custody in a prison in Montenegro serving a four month sentence for passport fraud. The United States Securities and Exchange Commission is also in line to get its hooks into Do Kwon for alleged fraud charges.

As a result of investors being “burned” by failed crypto projects and a lack of transparency from exchanges, South Korea has forged its first freestanding digital-asset bill. On June 30th, 2023 the National Assembly passed the Virtual Asset User Protection Act which will aid in protecting investors looking to take part in the world of virtual assets. The bill amalgamates 19 crypto-related bills. The Financial Services Commission will preside over the new crypto legislation and will oversee crypto service providers, such as exchanges and custodians. These entities could also be investigated by the Bank of Korea.

The new law requires digital asset companies to insure customer funds, hold a specific amount of reserve capital, and retain compulsory records. The bill makes clear distinction of digital assets and explains the ramifications of noncompliance by imposing penalties and liability for damages. The bill also warns against the use of confidential knowledge, market manipulation, and participation in unethical trading practices.

As reported by BeInCrypto, The country’s National Policy Committee Chair, Back Hye-ryun, said South Korea’s new crypto bill would first focus on investor protection. Existing capital markets laws will still govern securities, while the new bill will cover Bitcoin and other assets.

The new legislation may indicate South Korea is positioning itself to rival Hong Kong in welcoming digital asset investment.

Earlier this year, Gemini co-founder Cameron Winklevoss predicted that Asia would spur the next bull market.

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