South Korea’s plans for crypto regulations cleared their first hurdle with the National Assembly passing the first phase of review.
Following the successful passage of the cryptocurrency bill in the National Assembly, the Legislation and Judiciary Committee will need to pass the bill. It will likely become law this year.
Hwang Suk-jin, Digital Asset Special Committee member of the ruling People Power Party, told Forkast, “As both the ruling and opposition parties have agreed on the matter, the legislation will become law within the first half of the year.”
Crypto Service Providers Must Be Insured
The bill discourages crypto service providers from co-mingling users’ funds with providers’ funds. Additionally, they must keep the funds insured and have case reserves to tackle situations like a hack or system failure.
The Financial Service Commission (FSC) will oversee the crypto asset class, excluding the Bank of Korea’s Central Bank Digital Currency (CBDC).
Penalties for Non-Compliance
The government of South Korea has tried to draft the bill with consumer protection in mind. As a matter of fact, unfair profit earners may face a penalty of three to five times their illicit gains or up to one year in prison. That includes price manipulation or misleading marketing campaigns.
In cases where the victim reports losses exceeding 5 billion Korean won (approximately $3.73 million), the penalty may be increased. A sentence of between five years and life imprisonment is available to the courts.
Suk-jin wants to bring transparency to the nation’s crypto ecosystem. He concludes, “[The bill] will play an important role in establishing market order as it develops the basic law to block unfair trade acts.”
Also, the European Parliament recently approved the Markets in Crypto-Assets (MiCA) regulation. Experts believe that MiCA could soon become “a universal standard for customer protection and business efficiency.”
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