Recently on June 30, the South Korean Parliament introduced a bill called the “Virtual Asset User Protection” legislation, which specifically targets the cryptocurrency industry. The bill includes various provisions intended to safeguard against incidents similar to the collapse experienced by Terra LUNA.
A private joint task force meeting was held to discuss digital assets. The National Assembly issued a research service order for the second stage of legislation related to virtual assets, which may cover market-related matters.
After a week of the first crypto regulation bill, the local media outlet reported on June 5 that South Korea’s financial authorities are preparing for the second phase of virtual asset legislation to regulate the country’s cryptocurrency market. The legislation will address issues such as the issuance of virtual assets, conflicts of interest during issuance, and the establishment of a regulatory framework for stablecoins.
The Virtual Asset User Protection Act was passed previously, prompting the Financial Services Commission (FSC) to investigate issues related to crypto issuance and conflicts of interest generated by virtual asset operators. The FSC will now begin a research process to resolve these conflicts, regulate stablecoins, and establish standards for virtual asset evaluation, advisory services, and issuance.
In addition, the FSC is considering expanding the Virtual Asset User Protection Act through decrees following recent problems with local crypto investment platforms, Delio and Haru. These platforms suspended withdrawals on June 13 and 14 respectively due to false information provided by a consignment operator, leading to travel restrictions on their executives by South Korean prosecutors.
On July 3, during the meeting, the Financial Services Commission expressed its view to extend the Virtual Asset User Protection Act to cover virtual asset management firms, which currently operate in the gray area.
These regulations are being implemented by multiple countries due to the occurrence of various illegal activities in the crypto market. Previously, the South Korean Parliament was engaged in discussions to implement comprehensive regulations for the crypto industry. This was done to protect the approximately 15 million crypto users, ensure transparency, and safeguard investors.