South Korea Will Alter Its Legal System to Better Manage Cryptocurrency Projects
Authorities from South Korea are submitting additional revisions to the Digital Assets Bill to gain more control over cryptocurrency exchanges in the wake of the collapse of Terra LUNA and the bankruptcy of FTX. To stop situations like the FTX collapse from happening again, Congressman Yoon Chang-Hyun is drafting an amendment to increase the authority of financial authorities in their hands.
News 1, a local media outlet, reported that Chang-Hyun is advocating for greater authority to be given to the nation’s Financial Services Commission and Financial Supervisory Service “in lieu of self-regulation” of crypto exchanges.
“Rep. Yoon Chang-Hyun of the People Power Party plans to propose a revision of the secure digital asset transactions bill at the first legislative review subcommittee of the National Assembly’s Political Affairs Committee held on the same day.”
The new Digital Assets Act amendment mandates the required division of consumer deposits. Additionally, it allows financial regulators more control over unfair trading activities. As a result, regulators can monitor and check cryptocurrency projects and exchanges, safeguarding investors from multimillion-dollar losses like those brought on by Terra LUNA.
It’s important to note that South Korean authorities filed an arrest warrant in cooperation with Interpol to apprehend Do Kwon, the founder of Terra, who is still at large despite his denials and has been charged with fraud as a result of the demise of the UST stablecoin. This is not a solitary endeavor. Using Terra and FTX as examples, other authorities from around the world have called for more stringent regulations. These initiatives are being led by the United States, which has scheduled hearings to understand the issue better.
Another important change to the Digital Assets Law is that, unlike FTX and Alameda Research, bitcoin trading platforms won’t be allowed to arbitrarily take their users’ deposits once they have been remitted to a custodial institution. The new legislation further transfers control of such operations to financial regulators by eliminating the “self-regulatory” ability of cryptocurrency exchanges to take “appropriate measures” in the event of unusual price variations or trading volume variations.
Exchanges are now obligated to notify the Financial Supervisory Service Governor of unfair conduct promptly. The Governor will take the necessary precautions to stop fraud, money laundering, and other crimes. According to an unnamed National Assembly official, the modification to the Act “was introduced to reflect on the FTX incident and prevent a recurrence.”