The South Korean National Assembly passed the Virtual Asset User Protection Act at its plenary session on June 30, local media SBS reported. report.
The bill combines 19 different crypto-related bills aimed at establishing a regulatory framework for the industry and defining digital assets that are securities.
However, it is primarily focused on investor protection amid a spate of crypto-related scandals in the country over the past year.
The bill would create rules to prevent and punish illegal financial activities, as well as market manipulation and insider trading using non-public information.
Under this rule, violators are subject to fines of at least double the profits they make from unfair trading practices and imprisonment for a fixed term of at least one year.
The bill would also bring cryptocurrency-related companies under financial services regulation by imposing minimum capital requirements in the form of insurance against reserves and customer deposits, and keeping records of all crypto assets in custody. establish rules.
Additionally, the law empowers the country’s Financial Services Commission and central bank to oversee and investigate cryptocurrency platforms and companies.
Korea Blockchain Enterprise Promotion Association Secretary General Lee Seol-yeon Said Bloomberg News reports that while the new rules are a step in the right direction, applying rules written for traditional finance to digital assets is not the right approach.
The new rules are expected to quell some of the public backlash the government has faced since the failure of Terra LUNA, which prosecutors say is the biggest financial fraud in the country’s history.
South Korea has battled multiple scandals involving cryptocurrencies, further increasing the need for strict rules for the industry.
In May, South Korean prosecutors indicted Coinone executives on charges of market manipulation and paid listing of tokens.
In the same month, prosecutors launched an investigation into the cryptocurrency holdings of a high-profile lawmaker for alleged conflicts of interest, and found a significant amount of the now-delisted cryptocurrency called WEMIX.
The official was involved in legislation related to eliminating taxes on virtual assets. The investigation isn’t over yet.
An article about South Korea passing a new cryptocurrency bill focused on investor protection first appeared on CryptoSlate.