South Korea Creates One-Off Crypto Bill in Response to Do Kwon and Terra Collapse
South Korea finally approved crypto bill | Credit: Shutterstock
- The downfall of Do Kwon and crypto crime prompted regulation in South Korea
- Global authorities are tightening up their supervision over cryptocurrency
- South Korean exchanges reacted with high trade volumes on the BCH/KRW pair – Bitcoin Cash soars 30%
In April, a first phase assessment of a new crypto bill was approved by lawmakers in South Korea, giving the country’s Financial Services Commission the power to look into and monitor financial activities involving “digital assets,” such as cryptocurrencies.
Numerous restrictions on the purchase, storage, and trading of cryptocurrencies were included in the draft legislation, with a focus on consumer protection and compliance reporting.
The legislation was first unveiled in June 2022, just one month after the collapse of the Terra ecosystem precipitated sharp falls in the cryptocurrency industry.
South Korea Approves Its First Standalone Crypto Bill to Protect Investors
Not a year has passed after the collapse of tokens created by fellow countryman Do Kwon worsened a $2 trillion crypto market crash, and South Korea enacted its first independent digital-asset bill to strengthen investor protection.
After much delay, the Virtual Asset User Protection legislation, which unifies 19 crypto-related acts, was approved by parliament on Friday.
The bill defines digital assets and lays out the consequences of infractions, including using secret information, manipulating the market, and engaging in unethical trading methods.
The law grants the Financial Services Commission the authority to regulate both cryptocurrency operators and asset custodians. Such platforms could potentially be investigated by the Bank of Korea. The law mandates the maintenance of appropriate records, insurance, and reserve monies.
The regulations apply to assets like Bitcoin, and current capital-markets law applies to tokens considered securities.
Kwon Faces Charges
Kwon was recently found guilty of attempting to travel with a false passport and given a four-month prison sentence in Montenegro. After the collapse of his TerraUSD and Luna currencies in 2022 destroyed at least $40 billion, he is wanted by South Korea and the US.
Aside from the Kwon controversy, investors were separately reminded of the ongoing risks in the digital asset market in June when two South Korean-affiliated crypto lenders abruptly stopped accepting withdrawals.
Calls for legislators to speed up new regulations were sparked in March by a high-profile Seoul murder case connected to cryptocurrency investment losses.
Lee Suh Ryoung, chief secretary general of the Korea Blockchain Enterprise Promotion Association in Seoul, stated they support the authorities’ attempt to build order. However, he added, “the law, in general, remains stuck in the perspective of traditional finance when it comes to regulating crypto,” which can stifle rather than grow the sector.
According to Back Hyeryun, chair of the National Policy Committee of the South Korean Parliament, the new rules will initially emphasize safeguarding investors before gradually extending to cover more ground.
Crypto Laws as Rocket Fuel for Countries’ Economy
According to data from CCData, South Korea’s monthly spot crypto trading volume fell from a high of about $200 billion two years ago to roughly $38 billion in April. But the country’s recurring virtual-asset manias continue to be well-known.
International jurisdictions are stepping up their efforts to control digital assets. Hong Kong and Dubai are attempting to draw in cryptocurrency investors, while the European Union has passed the historic Markets in Cryptoassets (MiCA) regulation.
US officials have instituted a crackdown in response to a series of catastrophes, including the bankruptcy of the FTX exchange.
In order to become legislation, the Financial Services and Markets Act 2023, a reform proposal for the United Kingdom that recognizes bitcoin trading as a regulated financial activity, received so-called Royal Assent on Thursday.
The law defines “a cryptographically secured digital representation of value or contractual rights” as “crypto assets” and classifies them as regulated financial instruments, products, or investments.
According to a press release from the U.K. Treasury, it “enables the regulation of crypto assets to support their safe adoption in the U.K.,” calling it a “rocket boost” for the economy.
For the larger crypto business, the formal acknowledgment of cryptocurrencies in the U.K. signifies a significant development.
This “serves as an acknowledgment of the growing legitimacy of digital assets,” according to Jeff Feng, co-founder of blockchain software company Sei Labs, “something that is becoming increasingly crucial as countries throughout the world compete for supremacy in the crypto and tech space.”
According to Feng, who claimed that “the U.K. might be positioning itself as the “Singapore of Europe” when it comes to crypto, aiming to attract entrepreneurs and compete with other crypto-friendly European countries,” the action demonstrates the U.K.’s goal to become a hub for crypto innovation.
South Koreans Loading Up, Pushing Bitcoin Cash (BCH) Over 30%
It seems that bringing the new crypto law has a positive impact on crypto exchange businesses. According to industry analyst Colin Wu, Upbit, the biggest cryptocurrency exchange in South Korea, has seen extremely high trade volumes on the BCH/KRW pair during the last 24 hours. Nearly a fifth of the total volume for BCH during that time has been made up of transactions worth more than $350 million, he noted.
According to CoinGecko data , $545 million, or 27% of the exchange’s entire volume, was traded in BCH in a single day. Additionally, at the time of writing, it is the asset that is exchanged the most on Upbit.
Large volumes of Bitcoin Cash are also being traded in local currencies on the South Korean platform Bithumb. The only other pair on Bithumb with more 24-hour volume than this one is BTC/KRW with $33 million.
As a result, during the past day, the price of Bitcoin Cash has increased by an astounding 31%. Because of this, BCH has reached $300 for the first time since April 2022.
BCH has also increased by a staggering 186% during the last two weeks. Despite the enormous market momentum, BCH is still down 92% from its all-time high of $3,785 in December 2017.
