To protect cryptocurrency users, the South Korean cabinet approved the enforcement decree of the “Virtual Asset User Protection Law” on June 25. The decree will take effect on July 19, aiming to protect cryptocurrency users and establish a healthy order in the virtual asset market.
The main provisions of the “Virtual Asset User Protection Law” include defining virtual assets as valuable electronic certificates that can be electronically traded or transferred. It excludes certain electronic certificates regulated by other laws or posing low risks to users. The law also requires virtual asset service providers (VASPs) to securely store and manage users’ fiat deposits and virtual assets. Additionally, it introduces criminal penalties and fines for unfair trading practices involving virtual assets, such as insider trading and price manipulation.
The decree provides detailed procedures and methods for the implementation of the law. It excludes electronic bonds and gift cards under the “Electronic Financial Transactions Act,” as well as deposit tokens and non-fungible tokens (NFTs) from the definition of virtual assets. Furthermore, it mandates VASPs to continuously monitor abnormal transactions and report suspicious trading activities to financial authorities.
The law also sets standards for when information becomes “public” and imposes criminal penalties and fines for unfair trading activities. It allows VASPs to block user deposits and withdrawals under legitimate circumstances such as system failures, maintenance, or hacking incidents.
The enforcement decree is expected to be officially announced in early July and will be implemented on July 19, along with the “Virtual Asset User Protection Law.” The Financial Services Commission (FSC) will also develop new regulatory guidelines for the supervision of the virtual asset industry and market operations. The implementation of these laws and regulations is intended to create a basic safety net for user protection and promote a healthy market order.