South Korea Prepares for New Crypto Regulations

The South Korean Virtual Asset User Protection Act is to be expanded with the upcoming regulations from South Korea’s FSC.

South Korea Prepares for New Crypto Regulations

South Korea is actively preparing to introduce new regulations that will significantly impact the crypto landscape within the country. According to reports from local media, the financial authorities are embarking on the second phase of virtual asset legislation, which aims to regulate multiple aspects of the crypto market.

The objective is to establish a comprehensive framework that effectively addresses key concerns and ensures the smooth issuance of virtual assets. The upcoming regulations will primarily focus on several crucial areas. One of the key priorities is addressing conflicts of interest that may arise during the issuance process.

Additionally, there is a strong emphasis on establishing a regulatory framework specifically for stablecoins, considering their growing prominence in the crypto ecosystem. These issues have garnered significant attention, leading the National Assembly to direct the Financial Services Commission (FSC) to submit a report that specifically tackles these concerns.

To fulfill this directive, the FSC has commenced a research process with the goal of resolving conflicts of interest, regulating stablecoins, and establishing comprehensive standards for the evaluation, advisory services, and issuance of virtual assets.

The ultimate objective is to foster a transparent and well-defined environment that facilitates the growth and development of the crypto market. In light of recent incidents involving local crypto investment platforms, such as Delio and Haru, the FSC is also considering expanding the coverage of the Virtual Asset User Protection Act.

These incidents have brought to the forefront the necessity for enhanced protections in the crypto space. For example, Haru Investments had to temporarily suspend user withdrawals due to false information provided by an unidentified consignment operator, while Delio encountered withdrawal issues stemming from its association with Haru.

To address these concerns, the FSC is exploring the possibility of extending the regulatory umbrella of the Virtual Asset User Protection Act to encompass virtual asset management firms.

Presently, these firms operate within a regulatory gray area, and the FSC intends to bring them under a more robust regulatory framework to ensure the protection of investors.

The decision to consider this expansion follows in-depth discussions held by the FSC with other financial agencies and ministries, indicating a coordinated effort to enhance the overall regulatory landscape.

As South Korea takes proactive measures to refine its crypto regulations, it seeks to strike a delicate balance between encouraging innovation and upholding market integrity.

By effectively addressing conflicts of interest, establishing comprehensive regulations for stablecoins, and broadening the scope of protections, the country aims to create an environment that fosters responsible growth within the virtual asset industry.

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