Regulating the Cryptocurrency Landscape in South Korea
In a significant move aimed at regulating the cryptocurrency landscape, South Korean legislators are proposing changes to the existing Virtual Asset User Protection Act. This initiative seeks to improve supervision of speculative investment discussions held on social media platforms, as well as to enforce stricter regulations on cryptocurrency exchanges.
Legislative Proposals and Requirements
Spearheaded by members of the Democratic Party of Korea, notably Min Byoung-dug and Kang Hoon-sik, the proposed legislation would require social media chat rooms facilitating these discussions to register with the Financial Services Commission (FSC) as quasi-investment advisory firms.
Currently, laws prohibit these groups from offering compensation for investment losses, guaranteeing profits, or making misleading claims about potential returns. The new amendments would further mandate that crypto exchanges promptly notify the FSC regarding any updates or changes to their terms and conditions.
Protection of Customer Assets
In a related development, Min Byoung-dug has introduced another bill focused on the protection of customer assets in the event of a cryptocurrency exchange going bankrupt. This legislative effort aims to secure customers’ rights to reclaim their assets, ensuring they are not categorized as general unsecured claims, which would typically be divided among creditors in a bankruptcy case.
This proposal reflects a growing recognition of the need for robust protections for investors in the rapidly evolving digital currency market, as South Korea continues to navigate the complexities of cryptocurrency regulation.
