May 29, 2024
South Korea Imposes Stricter Crypto Regulations
Policy & Regulation

South Korea Imposes Stricter Crypto Regulations

The South Korean government has introduced amendments to the Virtual Asset Users Protection Act, enhancing cryptocurrency regulations to safeguard investors from market crimes. The Financial Services Commission (FSC), South Korea’s primary financial regulator, unveiled the updated law on February 7, focusing on protecting the rights of crypto investors and fostering transparency.

The newly enacted crypto law in South Korea addresses various aspects, including the prohibition of using “undisclosed important information” in the crypto market, preventing market manipulation, and illegal trading practices. The legislation imposes significant criminal penalties and fines for violations, with potential fixed-term imprisonment exceeding one year or fines ranging from three to five times the amount of illegal profits.

The Virtual Asset User Protection Act is slated to take effect on July 19, 2024, following its enactment on July 18, 2023, according to the FSC announcement. The law introduces stringent measures, including the possibility of life sentences for criminals profiting over 5 billion won (approximately $3.8 million) from illicit crypto trading schemes.

The FSC highlighted its authority to supervise and inspect virtual asset business operators, investigating and taking action against unfair trading practices as stipulated in the law. The regulator is empowered to ensure compliance with the Virtual Asset User Protection Act, inspect business operations, and assess the overall status of virtual asset business operators.

The legislative move comes in response to a significant industry crisis involving Terraform Labs and its founder, Do Kwon, a South Korean national. After the Terra collapse in May 2022, which wiped over $450 billion from the market, South Korean lawmakers passed the Virtual Asset User Protection Act in June 2023. Kwon is currently facing extradition to the United States, where he is charged with offenses such as commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.

In related news from the Asian region, Thailand’s Ministry of Finance has taken steps to boost the country’s position as a digital asset hub. The ministry announced the exemption of value-added tax (VAT) on digital asset trading, eliminating the 7% VAT requirement on income derived from cryptocurrencies starting from January 1, 2024, with no specified expiration date.

These regulatory developments underscore the ongoing efforts by governments to establish clear frameworks for the cryptocurrency industry, balancing investor protection, market integrity, and innovation. The South Korean amendments and Thailand’s tax exemption reflect a growing awareness of the importance of fostering a supportive environment for the digital asset ecosystem.

Image by Big_Heart from Pixabay

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