The South Korean parliament passed a law protecting users of digital assets. The approval was prompted by the collapse of the Terra ecosystem, backed by Do Kwon, a Korean citizen, Bloomberg reports.
The measure brings together 19 separate bills related to cryptocurrencies. It introduces the concept of “digital assets” and defines liability for offences such as insider trading, market manipulation, and unfair trading practices.
The law empowers the FSC and the Bank of Korea to oversee operators and custodians of the cryptocurrency market.
The document requires insurance coverage, reserve funds and transaction accounting. The rules apply to assets such as Bitcoin, while existing capital markets legislation applies to security tokens.
“We welcome the authorities’ attempt to bring order. But the law remains oriented toward TradFi, which could be more likely to curb the industry than to promote it,” said Lee Su Ren, the secretary-general of the Korean Association for the Promotion of Blockchain Enterprises in Seoul.
According to Beak Heo-yun, the chair of the National Policy Committee of the South Korean parliament, the new framework focuses on investor protection and is expected to expand gradually to provide comprehensive oversight.
In January 2023, it emerged that the Ministry of Justice of South Korea planned to implement system for tracking crypto transactions to counter money laundering.
In April, media reports said that the local central bank will receive permission to investigate and track actions related to the turnover of organisations’ digital assets.
The co-founder and CEO of Terraform Labs was found guilty of document forgery in Montenegro as he attempted to leave the country. Kwon also faces prison terms in South Korea and the United States.