Breaking: South Korea Passes First Crypto Asset Bill Amid Regulatory Woes In US

South Korea on Friday passed its first standalone virtual asset bill to boost investor protection at a time when the crypto industry faces regulatory challenges in other countries, especially in the US. The legislation aims to increase crypto oversight and protect investors from events like the Terra-LUNA crisis caused by Terra co-founder Do Kwon.

South Korea Virtual Asset User Protection Act Passed

South Korea’s National Assembly passed the “Virtual Asset User Protection Act” during the plenary session on June 30. The legislation combines 19 crypto-related bills which define digital assets; penalties for crimes such as the use of nonpublic information, market manipulation, and unfair practices; and gives more oversight power to the Financial Services Commission (FSC).

It is the first domestic legislation on virtual assets in the country that protect virtual asset users and restrict all unfair transactions. The crypto asset bill was passed by the Political Affairs Committee of the Korean National Assembly in May and the Judicial Committee of the Korean National Assembly on June 29.

“We will prepare for the second phase of legislation for virtual assets before the law is implemented. We will actively negotiate with relevant agencies such as the Ministry of Strategy and Finance, the Ministry of Science and Technology, the Ministry of Justice, the Ministry of Administrative Security, the prosecution, the police, the Bank of Korea, and the Financial Supervisory Service, and promote various measures to establish a market discipline system.”

The FSC will oversee crypto operators and crypto custodians, the Bank of Korea can probe such crypto platforms, and insurance coverage, reserve funds, and record-keeping are necessary. The rules will cover virtual assets such as Bitcoin, while tokens deemed securities fall under the Capital Markets Act.

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Prosecutors Seek Extradition of Do Kwon to the Country

South Korean prosecutors seek extradition of Do Kwon to the country for the 2022 Terra-LUNA crisis that wiped out at least $40 billion of investors’ wealth. According to prosecutors, Do Kwon could face 40 years in prison in South Korea.

Do Kwon was sentenced to four months in jail in Montenegro for boarding a flight to Dubai using a fake passport. The extradition is likely to happen in early 2024 as he is put in extradition custody until December.

Meanwhile, Swiss prosecutors froze crypto assets and fiat currency related to Terraform Labs and co-founder Do Kwon in digital asset bank Sygnum at the request of the New York Federal Prosecutors Office and the US Securities and Exchange Commission (SEC).

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