The Financial Services Commission, a regulator in South Korea, has proposed new crypto regulatory rules on consumer protection for crypto users in the country.
South Korea has regularly been in the news recently for crypto-related activities and policies. It also has an active crypto regulatory law, the Virtual Asset User Protection Act. One of its financial regulators, the Financial Services Commission, recently published a set of new rules to protect crypto users. The crypto regulatory rules for crypto asset service providers are under a consultation phase and will come into effect within July 2024.
Sharing the goals of its crypto regulatory law, the Financial Services Commission said, “It also provides statutory grounds for sanctions including criminal penalty and fines to punish unfair trading activities using virtual assets. The proposal is intended to specify details that the Act delegates to its subordinate enforcement decree and supervisory regulation.”
The South Korean regulator went on to specify the details of its new proposals. Firstly, it said the new crypto regulatory rules cover more tokens than the original law. It listed a list of tokens and virtual assets that the law excluded. Secondly, the rules specified that crypto firms should keep their users’ deposits separate from the firm’s money. Further, custodian banks would be able to invest users’ deposits in safe assets.
The crypto asset providers would also have to store most of their users’ money in cold wallets. Specifically, they would have to allocate 80% of such money to the cold wallets. Other proposals in the rules include virtual asset service providers mandatorily buying insurance liability and preventing them from blocking users’ money from withdrawals and deposits. The rules also mention the timing when material nonpublic information can go public.
The new rules could completely revamp the country’s crypto regulatory law in 2024.
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