The South Korean government has taken decisive
action to safeguard the interests of cryptocurrency investors with the
enactment of the Virtual Asset Users Protection Act, announced by the Financial
Services Commission (FSC) today (Wednesday).

Financial Services Commission Unveils Virtual
Asset Users Protection Act

The new law, slated to take effect on July 19,
2024, marks a significant step in regulating the cryptocurrency market in South
Korea. Aimed at curbing market crimes and enhancing transparency, the
legislation prohibits the use of undisclosed significant information in
cryptocurrency transactions, as well as activities related to market
manipulation and illegal trading.

Under the provisions of the Virtual Asset Users
Protection Act, severe penalties await violators, including fixed-term
imprisonment exceeding one year or fines ranging from three to five times the
amount of illegal profit. Particularly, individuals who amass more than $3.8
million from illicit cryptocurrency
trading schemes may face life sentences.

Moreover, the FSC emphasizes its
authority to supervise and inspect virtual asset business operators to ensure
compliance with the newly enacted legislation. This includes the investigation
and enforcement of measures against unfair trading practices.

#CryptoNews: South Korea’s Financial Services Commission (FSC) has proposed new legislation to its financial regulations that would give the watchdog more authority over the local crypto sector.🇰🇷https://t.co/hiQ7B8NEVt

— CoinMarketCap (@CoinMarketCap) February 6, 2024

Terraform Labs Collapse Sparks South Korea’s
Regulatory Response

The impetus for the Virtual Asset Users
Protection Act stemmed from a significant industry upheaval involving Terraform
Labs and its Founder, Do Kwon, a South Korean national. Following the collapse
of Terra in May 2022, which wiped out more than $450 billion from the market,
South Korean lawmakers moved swiftly to address regulatory gaps and strengthen
investor protections.

Kwon, currently
facing extradition to the United States, faces multiple charges, including
commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and
engage in market manipulation.

Earlier, the FSC
unveiled draft regulations mandating that companies engaged in
cryptocurrency holding or trading disclose transaction details to the financial
regulator, as reported by Finance
Magnates.

Outlined in the draft rules, the FSC stipulated that companies must provide
information regarding the volume of digital assets held, specifics regarding
the assets’ characteristics, and details about their business operations.
Moreover, the proposed regulations necessitated companies to reveal profits
generated from cryptocurrency activities alongside the market valuation of
their holdings.

This article was written by Tareq Sikder at www.financemagnates.com.