The South Korean government has passed a new crypto bill, known as the Virtual Asset User Protection Act, aimed at safeguarding cryptocurrency investors and preventing incidents like the implosion of Do Kwon's Terra ecosystem. On June 30. the bill was approved by Con progress with the objective of regulating unfair trade practices and providing protection for individuals investing in cryptocurrencies. The legislation consolidates 19 existing cryptocurrency-related acts, establishes a unified definition for digital assets, and imposes penalties for illegal trading activities, including market manipulation and the use of non-public information.
The Virtual Asset User Protection Act primarily applies the Capital Market Law to virtual assets with securities-like characteristics, marking a significant point in the legislation. The bill also aims to establish a framework for penalties and liability for damages resulting from unf air cryptocurrency transactions. To ensure the safety of investors, Virtual Asset Service Providers (VASPs) in South Korea are now required to take responsibility for users' deposits and provide insurance coverage. These measures aim to protect against risks such as hacker attacks and computer failures. Violations of the new regulations can result in penalties, including imprisonment for over one year or substantial fines. The Financial Services Commission has the authority to impose fines equivalent to double the profits gained from unfair trading practices.
These developments come in the wake of Do Kwon, the founder of Terraform Labs, being sentenced to four months in prison by a Montenegrin court for using a fake passport. He also faces an arrest warrant in South Korea for alleged violations of the country's capital market laws. South Korean prosecutors have recently described the Terra token crash as the largest case of financial fraud or securities fraud ever witnessed in the country. The passage of the Virtual Asset User Protection Act is part of the government's efforts to prevent such incidents ts and protect cryptocurrency investors in South Korea.
