South Korea is set to pass sweeping cryptocurrency legislation in a landmark move for the Korean Crypto Industry.
The new rules would provide the nation’s Financial Services Commission with the authority to investigate and supervise financial activity related to “digital assets”.
If passed, the bill would become one of the most far-reaching cryptocurrency regulations globally. The proposed legislation comes with a host of provisions governing the sale, storage and trading of cryptocurrencies, with emphasis on consumer protection and compliance reporting.
Businesses and individuals participating in the cryptocurrency economy in South Korea will be required to self-report irregularities to maintain compliance.
If found to be in violation, those convicted of infractions resulting in losses less than approximately $3.75m, such as failing to include required information in investor disclosures, price manipulation and false promotion of crypto assets, could face fines in the amount of three to five times the total losses and up to a year in prison.
Crimes resulting in losses over the $3.75m mark would be punishable with sentences ranging from five years to life in prison.
The proposed regulations would require exchanges and similar service providers to separate internal holdings from user assets, carry insurance and maintain reserves in the event of non-market-related losses.
Central bank digital currencies and assets tied directly to the Bank of Korea are the only reported exceptions. If passed, South Korea would join a growing list of countries that have enacted regulations for cryptocurrencies.
The proposed legislation was introduced in June 2022, just a month after the collapse of the Terra ecosystem triggered massive declines in the cryptocurrency sector. Terraform Labs co-founder Shin Hyun-seong and nine others were subsequently indicted by the South Korean government. The legislation is expected to become law by the end of the year.
The proposed regulations demonstrate the South Korean government’s commitment to regulating cryptocurrencies and protecting consumers. While some may argue that the harsh sentencing recommendations are excessive, the South Korean government is sending a strong message that it will not tolerate fraudulent or illegal activity in the cryptocurrency space.
The provisions governing the sale, storage and trading of cryptocurrencies, with emphasis on consumer protection and compliance reporting, are necessary to ensure a level of transparency and accountability in the cryptocurrency sector.
South Korea Crypto Regulation
In conclusion, the proposed cryptocurrency regulations in South Korea are among the most far-reaching in the world, and if passed, will require businesses and individuals participating in the cryptocurrency economy to self-report irregularities and maintain compliance.
The proposed legislation provides a level of transparency and accountability in the cryptocurrency sector and shows the South Korean government’s commitment to regulating cryptocurrencies and protecting consumers. While the harsh sentencing recommendations may be controversial, they send a strong message that the South Korean government will not tolerate fraudulent or illegal activity in the cryptocurrency space.