Regulation
South Korea strengthens protection for crypto investors for the first time with new law
South Korea has passed a new law to protect cryptocurrency investors, which is a welcome step forward. The move is significant because South Korea is a major hub for cryptocurrency activity. The new law comes in the wake of significant issues in the industry, such as the Terra-Luna Crash and the Cryptocurrency exchange FTX goes bankrupt few years ago.
I would say that the new South Korean crypto law is now in effect.
Its main objective is to ensure security.
Security for investors and integrity of cryptocurrencies.
CEXs must now store 80% of user deposits in gold wallets.
Let’s talk about putting safety on ice
-Iqbal Khan (@_iqbalkhan777) July 19, 2024
On Friday, July 19, a new law called the Virtual Asset User Protection Act (VAUPA) came into effect. The law is a major step in controlling the country’s growing cryptocurrency market. It consolidates 19 separate laws into one, establishing clear rules on digital assets and setting penalties for non-compliance.
THE The regulator wrote in a press release“The FSC hopes that the implementation of the Virtual Asset User Protection Act will lay the foundation for safe user protection.”
Key provisions of VAUPA
VAUPA brings together many laws related to cryptocurrencies, making the rules clearer and easier to understand. By doing so, South Korea hopes to make a a set of stricter laws for the cryptocurrency sectorThe law, which aims to protect investors, addresses unfair trading practices, market manipulation and the use of confidential information. These measures are important to maintain a fair and balanced market, especially given the anonymity common to crypto transactions.
In the same vein, VAUPA spares no effort to provide clear definitions of terms related to virtual assets. This allows all market participants to better understand things, thus eliminating any ambiguity that could lead to confusion in the long run.
Sanctions and enforcement measures
The law provides for severe penalties for market manipulation. Individuals or groups found guilty of changing prices or spreading false information are subject to fines and prison sentences. The law stipulates that using secret information for personal gain is not allowed. Based on the new law, violators could face severe consequences, including criminal prosecution. VAUPA also targets unfair practices that harm ordinary investors. Individuals who make money from unfair trading are subject to imprisonment for one year or more or a fine of 3 to 5 times the profits. “As it becomes possible to impose severe penalties on those who engage in unfair trading activities, this should also help establish a healthy order in the virtual asset market,” the statement continued.
The new law is the first part of a plan to promote good practices in the virtual asset sector. A second part of the law is currently being prepared and is expected to control how virtual assets are distributed and require certain disclosures.
As expected, industry players have generally welcomed VAUPA. It provides the necessary clarity and stability, encouraging responsible growth. But compliance with the law remains a challenge. Exchanges, projects and investors must adapt quickly to meet the new requirements.
South Korea’s Global Influence
South Korea is one of the first countries to have such a comprehensive law in place, and it is an example for other countries that want to follow its lead. It is possible that the country’s approach to investor protection will influence global cryptocurrency regulation. VAUPA balances encouraging innovation with protecting investors. This balance is important for sustainable growth in the future.