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South Korea Looks to Amend Crypto Bill for More Power Over Exchanges

2 mins
23 November 2022, 09:30 GMT+0000
Updated by Kyle Baird
23 November 2022, 09:30 GMT+0000
In Brief
  • Representative Yoon Chang-hyun of the People's Power party is proposing an amendment to a crypto regulation bill.
  • The amendment would give the Financial Services Commission more power in supervising crypto exchanges.
  • The bill was directly motivated by the FTX collapse, and authorities seek to prevent such an incident from reoccurring.
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South Korean lawmakers are proposing an amending to a crypto regulation bill. The bill would give financial regulators more authority over crypto exchanges.

South Korean lawmakers are preparing to amend crypto regulation that would grant them more power over crypto exchanges. The amendment follows the FTX incident, which has motivated governments the world over to regulate the crypto market more quickly.

Crypto bill amendment

Local media outlets report that representative Yoon Chang-Hyun of the People’s Power party plans to propose the amendment. The amendment focuses on bolstering the authority to protect investors and supervise and inspect business operators.

Specifically, it mandates the separate management of customer deposits and allows financial authorities to assess unfair trade practices. Currently, the bill asks for exchanges to keep users’ deposits in accounts that are separate from their own. It also says that a virtual asset “operator cannot arbitrarily seize the user’s deposit.”

The long and short of it is that the Financial Services Commission (FSC) has more power in its supervision of crypto exchanges. The FTX incident is a direct cause, with an official statement that it was intended to prevent it from reoccurring.

The FSC has also highlighted that it was considering other changes to exchanges. Primarily, it is mulling whether exchanges must offset investor losses and pay fines for the sudden suspension of withdrawal services.

Investigating native token listings of centralized exchanges

South Korea has been particularly active when it comes to regulation as a result of the collapse of Terra. The FSC is looking into whether exchanges were listing their own tokens. Many exchanges do this, and it has a major effect on the local market.

The FSC and the Korea Financial Intelligence Unit believe this happening despite restrictions. As such, they are investigating whether these native token listings on CEXs are occurring. Crypto exchange CEOs said that an FTX incident is unlikely because of the restriction.

South Korea Crypto Tax

Prosecutors freeze over $100M belonging to Terra

The country’s authorities continue to plod on in their investigation of Terraform Labs. Prosecutors recently froze over $100 million belonging to Terraform Labs co-founder Shin Hyun-Seong. The money comes from selling pre-issued LUNA tokens without informing retail investors. Hyun-Seong is under investigation for making unfair profits.

Meanwhile, according to Korean prosecutors, Do Kwon is reportedly living in Europe. The country’s officials revoked the co-founder’s passport as investors increasingly became angry.


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