Lawmakers in South Korea approved the nation’s first standalone crypto legislation to protect investors after a terminal implosion of the Terraform ecosystem last year that wiped out $40 billion from the crypto space. The new rulebook delivers nineteen crypto-related bills developed to define crypto assets and impose penalties for transgressions.
New Legislation Unites Nineteen Crypto Bills into One Law
South Korean parliament passed its first standalone crypto bill to increase investor protection after a devastating collapse of Terraform ecosystem in 2022 that sent shockwaves through the digital asset space. The parliament approved the Virtual Asset User Protection legislation on June 30, integrating nineteen crypto-related bills.
The legislation was developed to define digital assets and set strict penalties for wrongdoings such as market manipulation, illicit trading practices, and improper use of nonpublic information. In addition, the bill also provides the country’s Financial Services Commission and the Bank of Korea with authority over crypto operators and custody service providers.
Crypto firms that obtain registration to operate in South Korea must offer insurance coverage, maintain reserve funds, and establish a record-keeping system. The regulation also covers cryptocurrencies like Bitcoin, while tokens considered securities will be regulated under the existing capital-markets law.
Back Hyeryun, chair of South Korea’s National Policy Committee, said the new set of crypto rules would initially focus on investor protection, with plans to expand to offer broader oversight gradually.
Monthly Spot Crypto Trading Plunged Over $160M in 2 Years
South Korea’s efforts to regulate the digital assets space were drastically ramped up after the last year’s catastrophic crash of TerraUSD (UST) and LUNA – two crypto tokens developed by blockchain firm Terraform Labs. The implosion erased at least $40 billion from crypto markets, causing a knock-on effect on Three Arrows Capital (3AC) and Celsius Network.
Terraform’s co-founder and former CEO Do Kwon went missing after the collapse and was recently arrested by authorities in Montenegro. Last week, the 31-year-old Kwon was sentenced to four months in prison for passport forgery while he awaits extradition to either South Korea or the United States.
Monthly spot crypto trading volume in South Korea plunged to around $38 billion in April from almost $200 billion two years ago, highlighting the recent crypto winter’s impact on the local digital assets market.
This article originally appeared on The Tokenist
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