To protect cryptocurrency users, the South Korean Cabinet approved the enforcement decree of the Virtual Asset Users Protection Law on June 25. The decree will take effect on July 19, aiming to safeguard cryptocurrency users and establish a healthy order in the virtual asset market.
The main provisions of the Virtual Asset Users 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 with low risk to users. The law also requires virtual asset service providers (VASPs) to securely store and manage users’ fiat currency deposits and virtual assets.
Furthermore, the law introduces criminal penalties and fines for unfair trading practices involving virtual assets, such as insider trading and price manipulation. It also establishes a Virtual Asset Committee within the Financial Services Commission (FSC) to provide policy and system recommendations for the virtual asset market and VASPs.
Other provisions include the requirement for VASPs to continuously monitor abnormal transactions and disclose important information publicly. The law also allows VASPs to block user deposits and withdrawals in cases of system failures, maintenance, or hacking incidents.
The enforcement decree specifies detailed procedures and methods, including the separation of user funds from institutional assets and the safe investment of deposits in secure assets. It also mandates the disclosure of payment details to users in the event of VASP bankruptcy or deregistration.
The law will be officially announced in early July and implemented on July 19, along with the Virtual Asset Users Protection Law. The FSC will also develop new regulatory guidelines for the supervision of the virtual asset industry and market operations.
The FSC emphasizes that the implementation of this law and decree will create a basic safety net for user protection and promote a healthy market order. They assure that thorough preparations will be made to ensure smooth execution and strengthen user protection in the virtual asset market.