South Korea has adopted a new bill aimed at protecting cryptocurrency users. Named the “Virtual Asset User Protection Act,” this law has placed South Korea at the forefront of regulations in this area.
The bill, compiled from 19 different proposals, defines digital assets and establishes penalties for unfair transactions. Service providers are required to segregate user assets, maintain insurance, hold reserves in cold wallets, and keep transaction records. The Financial Services Commission will oversee and inspect service providers, while the Bank of Korea can request data from them. This legislation comes in response to increased scrutiny of virtual assets following an investigation into a lawmaker’s crypto holdings and the collapse of Terraform Labs.