The legislation, separate from the upcoming Digital Asset Basic Act, may came into force already in 2023.
In the aftermath of the Terra collapse last spring, South Korean legislators intend to ramp up legislation, putting specific emphasis on the protection of investors in virtual assets — i.e. digital currencies — and harshening penalties for unfair trade acts in the industry.
According to local media, the Financial Services Commission (FSC) and the National Assembly are working to pass a bill that would enable financial authorities to monitor and punish unfair trade practices such as the use of undisclosed information, price manipulation and fraud while supervising crypto exchanges.
The legislation bears an emergent character: While there are already 14 different proposals regarding crypto and digital assets circulating in the National Assembly and the ambitious and comprehensive Digital Asset Basic Act in the making, this one should guarantee more investor protection starting from 2023.
As an unnamed official from the National Assembly told the press:
“In the U.S., since the Securities and Exchange Commission (SEC) exercises a wide range of powers, it is possible to punish unfair trade in virtual assets without separate legislation, but in Korea, related legislation is absolutely necessary.”
While there are no details on the specific penalties for various malpractice, it is expected that they will be designed in order to synchronize the supervision and punishment at a level similar to that of the traditional financial industry.
South Korean authorities issued an arrest warrant for the Terra co-founder Do Kwon in September, which was subsequently dismissed, and Interpol added Kwon to its Red Notice list, requesting law enforcement locate and potentially detain him. On Oct. 6, South Korea’s foreign ministry ordered the Terra co-founder to surrender his passport or it would be canceled.
At the end of October, FSC revealed that it would monitor crypto whales with assets of over 100 million won ($70,000) to prevent money laundering efforts using digital assets.