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Financial authorities in South Korea prepares for the second phase of virtual asset legislation this month to regulate the remaining aspects of the crypto market. The move comes as South Korea’s National Assembly passed the “Virtual Asset User Protection Act” last week that defines digital assets, penalties for unfair transactions, and gives oversight power to the Financial Services Commission (FSC).
The FSC concluded a digital asset private joint task force (TF) working group meeting on Monday to outline legislation for fully incorporating virtual assets into the institutional system. The second phase focuses on regulating virtual asset issuance and financing by virtual asset operators, solutions to conflicts of interest in the issuance process, stablecoin regulatory frameworks, and other remaining aspects of the crypto market.
“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.”
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South Korea Passes Virtual Asset User Protection Act
South Korea’s National Assembly passed the “Virtual Asset User Protection Act” on June 30, which combines 19 crypto bills from legislators. It includes defining digital assets; penalties for crimes such as the use of nonpublic information, market manipulation, and unfair practices; and making insurance coverage, reserve funds, and record-keeping mandatory.
It also gives the Financial Services Commission authority to oversee and inspect virtual asset service providers and the Bank of Korea can request data from service providers.
South Korea has been strengthening crypto oversight and protection after the May 2022 Terra-LUNA crisis. On Tuesday, the Digital Asset eXchange Association (DAXA), an alliance of South Korea’s top five domestic crypto exchanges, announces integrating an alert system notifying users about abnormal trading.
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