The new legislative initiative stands out for its scale and severity. For example, damaging users for more than $3.73 million will be punishable by life imprisonment.
The National Assembly of South Korea approved a legislative act regulating the cryptocurrency market during the first phase of review. This was reported by the local media. The bill is then sent for review and adoption to the Legislation and Judiciary Committee, after which it’ll be considered again at a plenary session of the National Assembly. Local lawmakers expect the bill to be finally passed by the end of 2023.
The bill defines “virtual assets” as an “electronic representation of an economic value that can be traded or transferred electronically.” The definition doesn’t include central bank digital currency (CBDC) or other digital assets of the Bank of Korea. Moreover, the Bank of Korea’s services related to digital assets will be regulated by a separate piece of legislation.
The new bill will give the Financial Services Commission (FSC) the authority to monitor and investigate financial activities related to digital assets, including cryptocurrency. In addition, the new bill emphasizes consumer protection and reporting on regulatory compliance related to crypto trading and custody.
Other requirements that address user protection include the need for cryptocurrency providers to separately store user assets and deposits, insurance and provisions in case of hacking or system failures, and records of all transactions.
Last May, it became known that the South Korean government was preparing a regulatory framework to govern the cryptocurrency market. In early 2023, representatives from South Korea’s Ministry of Justice said that they were developing a system to track crypto transactions, which will be used to curb illegal activities.