Virtual Asset User Protection Act to Take Effect
The South Korean Financial Services Commission (FSC) is set to enforce the new Virtual Asset User Protection Act from July 19th onward. This act is intended to clamp down on market abuses within the cryptocurrency space, including manipulation, illegal trades, and undisclosed use of sensitive information.
Heavy Penalties for Non-Compliance
Under the new regulations, penalties have been significantly increased. Should illegal profits from virtual asset transactions exceed 5 billion won, perpetrators could face life imprisonment. Additionally, the FSC will coordinate with the Attorney General to determine appropriate fines.
Regulatory Obligations for Business Operators
Virtual asset exchanges and other related businesses are now required to securely manage user deposits through bank collaborations. Moreover, they are mandated to store at least 80% of the economic value of users’ virtual assets in cold storage, disconnected from the internet, to ensure their safety.
International Collaboration and Oversight Expansion
The Financial Supervisory Service (FSS) of South Korea is actively seeking guidance from international counterparts. The FSS head, Lee Bokhyun, is scheduled to meet with SEC Chairman Gary Gensler in New York as part of a broader 2024 business strategy that includes increased oversight of the crypto market. The FSS is also planning to establish two new bureaus dedicated to cryptocurrency market supervision.
Upcoming Cryptocurrency Law
Looking ahead, the FSC has released a legislative notice detailing provisions of a forthcoming cryptocurrency law. Expected to be enacted this summer, the law will set forth a number of requirements for crypto platforms, further tightening the regulatory framework around digital assets.
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