South Korea enacts comprehensive laws to protect crypto users
South Korea’s National Assembly has officially approved new legislation to safeguard users of virtual assets and amend the country’s capital market law. It prohibits unjust trading practices and provides user protection.
The “Capital Market and Financial Investment Business Act” has also been revised to impose penalties of up to double the profits from unfair trading, such as stock price manipulation.
This is the first time specific measures have been introduced to address cryptocurrencies following the enactment of the Specific Financial Transaction Information Act.
The Virtual Asset User Protection Act aims to establish a framework for imposing fines and liability for unfair trading of virtual assets, according to local Asian reports. It applies the regulations outlined in the Capital Market Act for virtual assets with securities-like characteristics.
Providers of virtual assets are now required to maintain records of virtual asset transactions, secure client deposits through deposits and trusts, obtain insurance coverage, and participate in mutual assistance programs to mitigate potential losses from hacking or system failures.
Engaging in unfair trading practices, concealing pertinent information, artificially inflating prices, and illicit business transactions can result in fines ranging from three to five times the avoided profits or losses. The Financial Services Commission possesses the authority to impose penalties equivalent to twice the amount of illicit earnings.
Moreover, the revised Capital Markets Act stipulates that individuals involved in three significant unfair transactions, stock price manipulation, utilization of undisclosed crucial information, and fraudulent, illegal transactions, may face fines up to twice the number of unjust gains and potential criminal penalties.
Previously, there was no standardized method for calculating the magnitude of illegal profits. This has been addressed by defining “unlawful profits” as the “total income minus total expenses.”
In cases where stock price manipulation is detected, but no improper gains are made, or the amount cannot be determined, a fixed penalty of 4 billion won has been established.
The amendment to the Capital Markets Act gained momentum following the decline in SG Securities’ stock prices, prompting financial authorities to advocate for more substantial penalties and punishments for unfair gains.
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