South Korea Passes Virtual Asset User Protection Act

By passing a new crypto bill, the South Korean government is taking steps to safeguard cryptocurrency investors from collapses like Do Kwon’s Terra ecosystem.

The National Assembly passed Virtual Asset User Protection legislation on June 30. According to SBS Biz, the bill is intended to regulate unfair trade practices and defend crypto investors.

The legislation reportedly incorporates 19 crypto-related bills, resulting in a unified bill that defines digital assets and imposes penalties for illicit trading activities such as using undisclosed information, market manipulation, and other unjust trading practices in crypto.

According to local media, the primary objective of the Virtual Asset User Protection Act is to first apply the Capital Market Act to virtual assets that have a securities-like nature.

The legislation also establishes a basis for imposing penalties and liability for damages resulting from unfair cryptocurrency trading.

Virtual asset service providers (VASPs) in South Korea are reportedly now required to assume responsibility for user deposits and provide insurance to protect investors.

Such measures are necessary to protect users from hacking, computer failure, and other threats.

According to a report by SBS Biz, violations of the new regulations are punishable by imprisonment for not less than one year or hefty penalties.

For instance, the Financial Services Commission can impose a penalty equivalent to two times that amount for profits gained through unethical trade.

The news comes shortly after the founder of Terraform Labs, Do Kwon, was sentenced to four months in prison by a court in Montenegro for using a fake passport.

The executive is also wanted in South Korea for allegedly violating the nation’s capital markets law.

Prosecutors in South Korea have recently asserted that the collapse of Terra’s tokens is the country’s largest and most significant securities fraud case ever.