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Cryptocurrency regulation is gaining momentum in South Korea as lawmakers seek to impose stricter regulations on digital assets in response to a shocking cryptocurrency-related murder case.
In a tragic incident reported by Bloomberg, a Korean woman was abducted and subsequently killed in a dispute over cryptocurrency-related losses.
The severity of the crime, which reportedly took place in late March, has drawn attention to lawmakers’ efforts to speed up passage of the country’s first offline cryptocurrency bill, which could soon pass a parliamentary vote, possibly as early as this month.
The incident highlighted the need for comprehensive regulatory measures to address the risks and challenges associated with the growing cryptocurrency industry.
In Focus: Bill to Protect Users of Virtual Assets
The event prompted lawmakers to expedite the passage of the nation’s first standalone cryptocurrency bill, known as the Virtual Asset User Protection Act, which consolidates 19 different crypto-related measures into a single, comprehensive law.
A draft of the bill obtained by Bloomberg shows that it aims to establish precise legal definitions of virtual assets and introduce penalties for offenses such as insider trading and market manipulation.
In addition, the proposed law aims to give the Financial Services Commission in South Korea the power to oversee cryptocurrency companies and hold digital assets.
Various Regulatory Paths for Cryptocurrency, Security Tokens
Under the new rules, cryptocurrencies such as bitcoin will be subject to the proposed rules, while tokens classified as securities by the government will continue to be subject to existing capital market laws.
By setting clear rules for digital assets, South Korea aims to increase the resilience of the cryptocurrency industry and protect investors from potential risks.
The mandatory insurance coverage provision in the bill aims to provide a safety net for digital asset companies, protecting them from financial loss in the event of cyberattacks or hacks.
In addition, stricter reserve fund and account management rules aim to bring more transparency and accountability to the cryptocurrency ecosystem.
BTCUSD is slightly above the critical $27K area. Chart: TradingView.com
The introduction of the Virtual Asset User Protection Bill comes at a pivotal moment for South Korea as the country grapples with growing concerns about the cryptocurrency industry.
Recent events, including the financial crimes committed by Do Kwon, co-founder and CEO of Singapore-based Terraform Labs, and the collapse of the Terra ecosystem, have heightened concern and shed light on the urgent need for strong regulatory action.
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