Crypto Bill in South Korea: Pushing Asia’s Crypto Hub

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By A D

Asia’s regulatory clarity and proactive stance fuel crypto industry innovation, investment, and growth amid global uncertainty.

The Virtual Asset User Protection Act was passed by the National Assembly of South Korea on June 30 to safeguard cryptocurrency investors from unfair trade practices and market manipulation. It consolidates 19 crypto-related bills into a unified legislation that provides a clear definition of digital assets and establishes penalties for illicit trading activities.

One of the key focuses of the Virtual Asset User Protection Act is the application of the Capital Market Act to digital assets that exhibit characteristics similar to securities. This approach ensures that specific virtual assets receive regulatory treatment akin to traditional securities, including increased oversight.

national assembly in korea paased an act for protection of crypto asset owners
The National Assembly in South Korea. Image Source

The oversight and inspection of service providers in the crypto industry will be carried out by the Financial Services Commission (FSC), granting them authority in this domain. Additionally, the Bank of Korea has been authorised to request data from these service providers, enabling better compliance monitoring.

Investor protection is a paramount objective of the legislation. To achieve this, virtual asset service providers (VASPs) in South Korea are now obligated to assume responsibility for users’ deposits and provide insurance coverage. These measures are designed to mitigate risks such as hacks and computer failures, thereby safeguarding users’ investments.

Violating the newly established rules can lead to fixed-term imprisonment of not less than one year or significant fines. The Financial Services Commission is empowered to impose penalties equivalent to twice the profits gained from unfair trade practices, serving as a strong deterrent against illicit activities.

The Virtual Asset User Protection Act follows the legal troubles faced by Do Kwon, the founder of Terraform Labs, associated with the Terra ecosystem. Do Kwon was sentenced to four months in prison in Montenegro for using a false passport and faces the possibility of extradition to South Korea on allegations of violating the country’s capital markets law.

South Korean prosecutors have labeled the collapse of Terra’s tokens as the largest financial fraud or financial securities fraud case in the country’s history. This further underscores the significance of the new legislation in protecting citizens from such incidents within the crypto space.

Hong Kong’s Web3 Task Force

In a recent announcement by the Government of the Hong Kong Special Administrative Region, it was revealed that a task force dedicated to promoting Web3 development has been established. The initiative, effective immediately, aims to support the growth of decentralised next-generation internet technologies and cryptocurrencies. Led by Hong Kong’s financial secretary, Paul Chan, in collaboration with government officials, regulators, and industry experts, the task force will work towards the sustainable and responsible development of Web3 in the region.

Read: Paul Chan says, Despite market uncertainty, it is the “right time” for Hong Kong to pursue Web3

Objectives of the Task Force: Over a two-year period, the task force will focus on the following objectives:

  1. Sustainable and Responsible Web3 Development: The primary goal is to provide recommendations and guidance for the sustainable and responsible development of Web3 technologies in Hong Kong. This includes addressing challenges, promoting best practices, and ensuring ethical growth within the sector.
  2. Attracting Top-notch Talent and Companies: The task force aims to create an environment that attracts high-caliber talent and innovative companies operating in the Web3 space. By fostering a thriving ecosystem, Hong Kong seeks to position itself as a hub for Web3 development and technological innovation.

Hong Kong has been proactive in positioning itself as a leading center for cryptocurrencies and embracing the opportunities presented by Web3 technologies. The territory released an official policy statement on Virtual Assets in 2022, which received a positive response from the market. This, in turn, led to the establishment of the task force to further drive Web3 development in Hong Kong.

Paul Chan, Hong Kong’s financial secretary, acknowledges the transformative potential of Web3 technologies. He highlights their ability to address challenges in finance, trade, business operations, and daily life, emphasizing the importance of integrating Web3 into Hong Kong’s development plans. Hong Kong, being an international financial center and a city focused on innovation and technology, recognizes Web3 development as a major trend aligning with its goals.

Hong Kong has actively cultivated a supportive regulatory environment for virtual assets and Web3 companies. To provide clear guidelines for Web3 businesses, the territory recently released a Virtual Asset Trading Platform (VATP) handbook. This initiative aims to attract virtual asset-related companies to establish a presence in Hong Kong, further promoting the growth of the Web3 ecosystem.

Read: Hong Kong on the Path to Becoming Asia’s Crypto Hub

The world of cryptocurrency and blockchain technology continues to evolve rapidly, prompting governments to take steps to protect investors and promote responsible development. South Korea and Hong Kong are taking significant steps to navigate the complexities of the cryptocurrency industry and Web3 technologies. As regulatory uncertainty looms in the United States and other parts of the world, Asia’s regulatory clarity and proactive stance create an environment conducive to innovation, investment, and growth in the crypto industry.

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