According to recent media reports, South Korean lawmakers are intending to implement a strict set of regulations on the crypto sector. The lawmakers’ intent comes after a heinous incident that recently took place involving cryptocurrencies.
Sources reveal that the authorities have been startled by a gruesome murder of a Korean citizen involving digital assets. Reportedly, a Korean woman was abducted on March 29 and later murdered in a dispute which is believed to have stemmed from a disagreement over cryptocurrency-related losses.
The case added to the string of digital-asset-related scandals that took place in Korea including the collapse of the Terra ecosystem in May last year. Notably, the recent murder case has added urgency for lawmakers to expedite the nation’s first standalone crypto bill, which could be passed in a parliamentary vote later this month.
There is finally a consensus on both sides of the aisle that we need to get a law in place as soon as possible. There were too many issues, so it was necessary to focus on one thing first — investor protection — to move on quickly.
Back Hyeryun, a lawmaker from the opposition Democratic Party of Korea
In their pursuit of efficiently regulating the crypto sector, the lawmakers are working on a new prospective bill called the Virtual Asset User Protection Bill, which wraps together a total of 19 different crypto-related measures into one standalone bill.
According to a draft version of the bill seen by a reputed media house, the legislation highlights clear legal definitions of virtual assets and imposes penalties for offenses such as insider trading and market manipulation. Additionally, the new bill aims to grant the country’s Financial Services Commission (FSC) the power to oversee crypto companies and custody of assets.
The act also mandates that digital assets firms take out insurance to protect themselves from hacks as well as tighter rules on reserve funds and account keeping. These rules are set to apply to cryptocurrencies such as Bitcoin while existing capital-markets law would apply to tokens that the government has deemed to be securities.
Simultaneously, the Bank of Korea (BoK) is making efforts to ensure ample investors’ protection in regard to virtual assets. The central bank has been given the power to investigate cryptocurrency-related businesses and request transaction data from crypto exchanges.
Alarmed by the increasing crimes and threats in the crypto sector, the regulators expressed their desire to regulate stablecoins after being affected by the crash of the tokens. Considering the rise in crypto-powered drug trafficking after a large number of narcotics-trading teens were handed jail time, Yoon Seok-yeol, president of South Korea, called for all the agencies to work in unison.
All of this has pushed South Korean regulators and lawmakers to speedily work on regulating the sector. The South Korean Police have listed dark web tracking, virtual asset analysis, and DDoS attacks as “three central tasks of the cyber-terrorism investigation” that the authorities must urgently address.