South Korea’s sweeping crypto bill passes first regulatory hurdles

South Korean lawmakers have passed a Phase 1 review of proposed regulations that would give the country’s Financial Services Commission powers to investigate and oversee financial activities related to “digital assets,” including cryptocurrencies.

The proposed bill contains a myriad of provisions governing the sale, storage and trading of cryptocurrencies, with a particular focus on consumer protection and compliance reporting.

Hwang Seok-jin, a member of the Digital Assets Special Committee of the ruling People’s Power Party Said News outlet Forkast suggested that the bill could be enacted by the end of the year after saying “both the ruling and opposition parties have agreed on the issue”.

Related: Bank of Korea Granted Rights To Investigate Local Cryptocurrency Firms

If passed, the bill would be one of the most drastic domestic cryptocurrency laws in existence. Exchanges and similar service providers must segregate internally held assets from user assets, take out insurance, and maintain reserves in the event of non-market related losses.

The only reported exceptions are Central Bank Digital Currencies (CBDC) and assets directly tied to the Bank of Korea.

Companies and individuals participating in South Korea’s cryptocurrency economy are also required to self-report fraudulent activity in order to remain compliant.

The Commission has included penalties recommendations that impose relatively severe penalties if businesses or individuals violate the proposed law.

According to Forkast, the bill was convicted of offenses that resulted in losses of less than approximately $3.75 million, including “failure to include information necessary for disclosure to investors, price manipulation, and false promotion of crypto assets.” Contains language stating that the victim may face a fine of three to five times the total amount of the loss and up to one year in prison.

Crimes resulting in losses greater than the $3.75 million specified in the law will be punishable by penalties ranging from five years to life imprisonment.

Incidentally, the CEO of Titanium Blockchain was recently convicted in the US of defrauding consumers out of $21 million and was sentenced to 4 years and 3 months.

the bill is announced In June 2022, just one month after the collapse of the Terra ecosystem, the cryptocurrency sector saw a significant drop. Subsequently, Terraform Labs co-founder Shin Hyun-sung and nine of his others were indicted by the South Korean government.