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South Korea to Enforce Virtual Asset Act, Regulatory Head to Meet with Gary Gensler in US

Introduction: The Financial Services Commission (FSC) of South Korea is set to enact the Virtual Asset User Protection Act from July 19, aimed at regulating virtual asset activities within the country. Concurrently, the head of South Korea’s chief financial regulator, the Financial Supervisory Service (FSS), is scheduled to meet with Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), during a visit to New York.

Implementation of Virtual Asset User Protection Act: Reports from local media indicate that the Virtual Asset User Protection Act will address issues such as market manipulation, illegal trading, and the misuse of undisclosed material information related to virtual assets. Provisions within the enforcement decree and supervisory regulations outline stringent penalties, including potential life imprisonment for individuals found guilty of illegal profit exceeding 5 billion won. The Financial Services Commission will collaborate with the Attorney General to determine fines for violators.

Regulatory Measures and Supervision: Under the new regulations, virtual asset exchanges and operators are mandated to manage user deposits through established banking channels. Moreover, operators must securely store at least 80% of users’ virtual assets offline, ensuring enhanced security measures to safeguard against cyber threats.

International Engagement and Collaboration: Lee Bokhyun, the head of the Financial Supervisory Service (FSS), is planning a visit to New York to engage with regulatory counterparts, including SEC Chairman Gary Gensler. This meeting underscores South Korea’s commitment to international cooperation in addressing regulatory challenges and fostering a conducive environment for virtual asset markets.

Stricter Crypto Industry Regulation: The FSC’s proactive approach to tightening crypto industry regulation includes the establishment of specialized bureaus dedicated to overseeing the crypto market. Additionally, legislative notices have been issued outlining forthcoming cryptocurrency laws expected to be enacted during the summer. These laws will impose various requirements on crypto platforms aimed at enhancing transparency, security, and investor protection.

Conclusion: South Korea’s move to enforce the Virtual Asset User Protection Act reflects a broader trend of regulatory efforts aimed at fostering transparency and accountability within the virtual asset space. By engaging with international regulatory bodies and implementing robust regulatory frameworks, South Korea aims to ensure the integrity of its financial markets while promoting innovation and responsible growth in the crypto industry.

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