Recently, the South Korean parliament has commenced its discussion for robust and wide-ranging crypto regulations. The government is prioritizing investor protection and the issuance and disclosure of assets.
According to local media reports, South Korean authorities have started engaging in an intense discussion about the Digital Assets Act to upgrade their plans for regulating the sector. Notably, the two primary priorities of the discussion were found to be investors’ protection and the issuance and disclosure of virtual assets.
Investors’ protection has been a priority for the authorities for a very long time as reiterated by them in a number of instances. Reportedly, the South Korean crypto market exceeded 55 trillion won (around $42 billion) in the second half of 2021. Further, data estimates that around 15 million users are using crypto in total.
Hence, authorities think putting investor protection and disclosure measures in place is essential and the recent discussion is a major step toward that. Additionally, recent incidents such as the downfall of the stablecoin UST have only added to the list of reasons why a regulation must be in place.
Sources reveal that the National Assembly Executive Committee in South Korea has legislation related to cryptocurrencies pending. There are around 18 pending bills, amongst which there are eleven enactments on virtual assets, four amendments to the Electronic Financial Transactions (EFT) Act, two amendments to certain financial information laws, and one amendment to the Financial Services Commission (FSC).
The next step from the authorities is expected to hold consultancy with experts for their opinion and hold public hearings. Following that, the legislation will be able to move forward after being held up in the early stages.
It is nothing new that South Korea wants to regulate the cryptocurrency market and intends to prioritize investors given the huge investor base. However, authorities seem to be inclined toward implementing a comprehensive regulatory framework.
In May 2022, the South Korean president displayed a soft stance towards cryptocurrencies and decided to lift the ban on Initial Coin Offering (ICO) which was put in 2017. Unfortunately, the contentment was short-lived as the collapse of Terra followed by the other collapses last year including FTX, the regulators decided to toughen their stance on crypto firms and also decided to regulate stablecoins.
As reported by Todayq News in December, Busan, the blockchain city of South Korea, dropped most of the global centralized exchange partners from its local crypto exchange establishment plan. In an official announcement, the city announced a steering committee consisting of 18 blockchain experts but none of the five exchanges were reported earlier in its plan.
However, South Korean authorities have also dedicated a significant share of attention to Web3 and the metaverse. Notably, the country has invested $1.6 million in a metaverse fund and the officials are also working on creating a Metaverse Industry Promotion Law.
Nonetheless, it is going to be interesting to see how the Crypto regulations in South Korea take shape. While the authorities have been subtly wary of cryptocurrencies, the outcomes from the feedback and discussions will play an important role in designing the future of crypto in the nation.