The new legislation reportedly linked 19 crypto-related bills into one law.
South Korea’s government has enacted a comprehensive crypto bill to protect investors against market manipulations and unfair trading practices.
According to the report shared by the local news agency SBS Biz, the National Assembly of South Korea approved the Virtual Asset User Protection bill.
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The legislation connects 19 crypto-related bills into a single comprehensive law that gives a clear definition of digital assets and specifies penalties for illicit trading activities. These activities could range from the use of undisclosed information and market manipulation to other forms of unfair trading practices.
The focal point of the Virtual Asset User Protection Act is to initially apply the Capital Market Act to virtual assets that have securities-like characteristics. Furthermore, it aims to lay the groundwork for imposing penalties and assuming liability for damages deriving from unfair cryptocurrency trading.
The bill highlights that any breach of the new regulations could lead to penalties, including imprisonment for a minimum of one year or substantial fines.
A crucial element of this legislation is the requirement for all South Korean Virtual Asset Service Providers (VASPs) to offer insurance for all user deposits. This requirement was designed to strengthen user protection against threats like hacks, computer failure, and other associated risks.
This legislative development comes shortly after the court in Montenegro sentenced Terraform Labs founder Do Kwon to four months in prison for using falsified documents. It is worth noting that both the United States and South Korea seek Do Kwon’s extradition.
South Korean prosecutors recently argued that the collapse of Terra’s ecosystem constitutes the largest case of financial fraud witnessed in the country.
The enactment of the new cryptocurrency bill in South Korea signals the government’s commitment to bolstering investor protection and ensuring fair trade practices in the dynamic crypto market.