- It aims to protect investors
- The authorities were prompted by the collapse of the Terra ecosystem
On Friday, June 30, South Korea passed a digital asset bill to protect investors. Notably, the regulation includes 19 separate laws related to cryptocurrencies. It defines digital assets and provides strict penalties for violations such as the use of confidential information, market manipulation and unfair trading practices.
According to the recently passed legislation, the Financial Services Commission is given the authority to oversee cryptocurrency operators and asset custodians. The Bank of Korea also has the right to inspect such platforms. In addition, the law requires insurance coverage, reserve funds, and required documentation. The rules apply to assets such as bitcoin, and existing capital markets legislation deals with tokens, which are considered securities.
That said, not everything is smooth sailing. Lee Soo-ryong, secretary general of the Korea Blockchain Enterprise Development Association in Seoul, said the law is still “stuck.”
“We welcome the authorities’ efforts to ensure order, but overall the law, like the past, is stuck in the traditional finance paradigm, which may stifle the cryptocurrency industry more than promote it,” he said.
According to Baek Hyorun, chairman of the national policy committee in South Korea’s parliament, the new set of rules will first focus on protecting investors and will gradually expand to provide a broader level of oversight.
According to CCData, monthly cryptocurrency trading volume in South Korea in April declined to about $38 billion from nearly $200 billion two years ago, before the Terra. Despite this, the country continues to be known for periodic virtual asset mania.
In spite of this, the country continues to be known for periodic virtual asset mania.