With the latest adoption of the country’s first digital-asset laws, South Korea moves closer to legalizing cryptocurrencies. The law, intended to strengthen the protection of investor interests, comes as South Korean cryptocurrency exchanges experience an increase in trading activity.
Long Overdue Transfer With regard to Crypto Rules
A groundbreaking rule in the area of digital property, the Digital Asset Consumer Safety regulation unifies 19 crypto-focused payments. This law’s implementation experienced a protracted delay before finally receiving Parliament’s approval.
This new legal framework provides precise definitions for digital property and imposes severe punishments for a number of offences like insider trading, market manipulation, and deceptive purchasing and selling techniques.
Increasing the Scope of Cryptocurrency Action Monitoring
The legislation gives the Financial Services Commission (FSC) the right to regulate all cryptocurrency operators and custodians. Additionally, the Financial Institution of Korea will receive approval for its examination of these platforms.
The act’s incorporation of requirements including insurance protection, reserve fund maintenance, and required record keeping is one of its many highlights. Notably, these new laws apply to cryptocurrencies like Bitcoin, whereas tokens considered securities will likely be governed by the current capital markets regulation.
Getting Past Difficulties
This regulation has emerged a year after the shocking collapse of tokens orchestrated by South Korean Do Kwon, which sparked a startling $2 trillion bubble in the global cryptocurrency market.
When two South Korean-affiliated lenders for digital assets abruptly stopped accepting withdrawals in June, the industry was once again thrown into upheaval. Despite these incidents, South Korea continues to play a vital role in the global bitcoin environment.
Mixed Reaction from the Crypto Community
Even while the new legislation is generally regarded as a positive step, not everyone seems to agree. According to Lee Suh Ryoung, the top secretary-general of the Korea Blockchain Business Promotion Association in Seoul, the new legislation may unintentionally restrict rather than encourage the growth of the industry.
He contends that the architecture of the law maintains a conventional financial understanding of cryptocurrencies. However, the recently passed legislation marks a significant turning point in South Korea’s efforts to integrate cryptocurrencies into its financial system.
