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The government of South Korea has been working to protect cryptocurrency users and investors with a new bill.
Earlier, the National Assembly passed the Virtual Asset User Protection Act which aims to regulate trading to protect crypto users from unfair trade practices. According to a report from local news agency SBS Biz, the new legislation introduces new crypto law with 19 crypto-related bills which offer definitions of digital assets. The bill also sets penalties for illegal trading practices, which includes undisclosed information that can impact traders and market manipulation that swings the prices of cryptocurrencies and digital assets.
According to the report, the new law has penalties as harsh as major fines and more than one year of fixed-term imprisonment. The Financial Services Commission has an example of a penalty fine of around double the amount for profits acquired from unfair trading practices.
Why the Virtual Asset User Protection Act?
The key reason for the Virtual Asset User Protection Act is to apply the Capital Market Act to digital currencies first, especially those which resemble securities. To protect crypto investors, virtual asset service providers in the country will be held responsible for users’ deposits as well as ensuring they offer insurance to their customers. This will help protect users not only against malpractice in trading, but also against risks such as hacks and technical failures.
This comes off the back of a major scandal in the digital assets industry in South Korea, with Terraform Labs founder Do Kwon’s imprisonment. The founder faces four months in prison, sentenced by a court in Montenegro after being caught using a false Costa Rica passport earlier this month, as announced by the Montengran court. Kwon’s co-worker and former chief financial officer for TerraLab Han Chong-joon was charged with Kown, receiving the same sentence. Kwon already has an arrest warrant in South Korea for reportedly violating capital markets law.