South Korea has enacted a significant new crypto bill aimed at protecting cryptocurrency investors from potential setbacks similar to those experienced by Do Kwon’s Terra ecosystem tokens. On June 30, the South Korean parliament passed the Virtual Asset User Protection legislation, which is designed to oversee fair trade practices and provide security for individuals investing in cryptocurrencies. This move is seen as a response to recent incidents in the crypto space.
The new legislation consolidates 19 different crypto-related bills into a single framework, creating a cohesive definition for digital assets and establishing penalties for illicit trading activities, such as market manipulation and the use of undisclosed information. One of the key features of the Virtual Asset User Protection Act is the application of the Capital Market Act to virtual assets with securities-like qualities. Additionally, the legislation seeks to establish clear guidelines for penalties and accountability in cases of unfair crypto trading.
To ensure the well-being of investors, virtual asset service providers (VASPs) in South Korea are now obligated to safeguard user deposits and offer insurance coverage. These precautions are vital to safeguarding users against potential risks such as hacking or technical failures.
According to reports, violations of the new regulations could lead to penalties including fixed-term imprisonment of at least one year or substantial fines. For instance, profits gained through unfair trading could result in fines equivalent to double the gained amount, imposed by the Financial Services Commission.
This development follows closely after Do Kwon, the founder of Terraform Labs, received a four-month prison sentence in Montenegro for using a false passport. Furthermore, he faces an arrest warrant in South Korea due to allegations of violating the country’s capital markets law. Prosecutors in South Korea have referred to the collapse of Terra’s tokens as one of the most significant cases of financial fraud in the nation’s history.
