South Korean Authority Approves a New Crypto Bill to Address Unfair Trading Practices
Following the fallout of major crypto exchanges that plunged vital market players into a liquidity crisis, the South Korean authority has taken regulatory actions to safeguard the investor’s interest. The policymakers in South Korea have passed a new bill on crypto assets to prevent the recurrenceTerraform cases that exposed customers to loss of assets worth $2 trillion.
Today, the South Korean National Assembly lawmakers greenlighted the Virtual Asset User Protection bill. It was reported that 265 members supported the bill without objection at the June 30 plenary meeting.
Will the New Bill Combat Unfair Trading Practices?
Initially, the regulators had joined forces with the lawmakers to formulate a bill addressing unfair trade practices. In an exclusive interview with the local newsroom SBS Biz, regulators agreed to amend the existing rules to safeguard investors in exploring the crypto space.
While drafting the new bill, the policymakers proposed 19 crypto regulations to create a well-synthesized and harmonized bill. Under the new bill, the lawmakers provided a well-detailed report on digital assets and the penalties an individual or company will incur for engaging in unfair trading practices.
The report illustrated that unfair crypto trades involve unlawful actions such as disclosure of vital information to a third party, market manipulation, and deceptive marketing of digital assets.
In a statement captured on the local media site, the South Korean authority aims to apply the Capital Market Act to digital assets classified as securities. On the other hand, implementing the Virtual Asset User Protection Act aimed at reducing unfair trading activities through imposing penalties and other potential actions.
Scope of the Virtual Asset User Protection Legislation
Following the approval of the new crypto bill, the South Korean virtual asset service providers (VASPs) will be required to be accountable for the deposits made by the user. The VASPs will be necessary to provide the user with insurance services compliantly.
Furthermore, adopting the new regulation aims to protect the user from any crypto-related crimes, such as hacks and other system failures. According to the imposed penalties, non-compliant firms will be subjected to a one-year jail term and additional court penalties.
The new bill has outlined the conditions and procedures for imposing the penalties. As such, if the Financial Service Commission reportedly engaged in unfair crypto trades, the regulators will require the commission to settle penalties equivalent to double the gains generated from the exploitative business.
The new bill came after the court in Montenegro ordered the founder of Terraforms Do Kwon to be placed behind bars for four months. Do Kwon was charged with forging travel documents and contravening the capital market regulations.
In a recent court hearing, a prosecutor at the court noted that the crashing of Terra tokens ranks as the largest financial securities fraud to occur in South Korea.
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