South Korea enacted its first independent digital-asset bill to strengthen investor protection. Barely one year after the collapse of tokens created by Terra/LUNA’s ex-CEO Do Kwon worsened a $2 trillion crypto market crash, Bloomberg reports.
After much delay, the Virtual Asset User Protection legislation, which unifies 19 crypto-related acts, was approved by parliament on Friday. The code defines digital assets and lays out the consequences of infractions such using secret information, manipulating the market, and engaging in unethical trading practices.
This landmark piece of legislation’s main goal is to make it safer for investors to engage in the digital asset market. To safeguard the monetary health and safety of cryptocurrency operators, the act requires the deployment of insurance coverage, reserve funds, and thorough record-keeping. By enacting these rules, South Korea hopes to boost trust and encourage ethical behavior in the bitcoin sector.
Several kinds of digital assets are covered by the recently passed South Korean law, with an emphasis on well-known digital currencies like Bitcoin. As a safeguard for investors against possible damage due to breaches of security or negligence, the law requires digital-asset operators to get insurance coverage. In order to increase these operations’ financial resilience, the law also requires the creation of reserve funds.
Multiple incidents that highlighted the dangers associated with the digital asset market led to South Korea’s passage of the separate crypto bill. Notably, Do Kwon was wanted internationally for arrest after the failure of his TerraUSD and LUNA currencies caused losses in excess of $40 billion. The stricter standards and improved oversight procedures under the new legislation are intended to stop such instances from happening.
The adoption of South Korea’s first separate digital-asset bill is a significant step towards enhancing investor protection and building a thorough regulatory framework for the cryptocurrency industry. The Act gives regulatory agencies more control and enforcement authority, ensuring that cryptocurrency providers and asset custodians follow strict regulations.
The new regulation intends to reduce risks and increase investor confidence in the market for digital assets by requiring insurance coverage, reserve reserves, and improved record-keeping procedures. The rules address a wide range of assets, including well-known cryptocurrencies like Bitcoin and tokens categorized as securities.