Industry "Welcomes" Move to Enact Basic Cryptocurrency Act

Representative Proposal by Yoon Chang-hyun of the People Power Party
Includes Asset Protection and Unfair Trade Regulation
Calls for Promotion Measures Also Raised

Yoon Chang-hyun, Member of the People Power Party [Photo by Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As the political sphere moves to enact a basic law to fill the legislative gap regarding virtual currencies, the related industry is welcoming the development. However, there are also opinions that additional provisions for industrial promotion should be included.

According to political sources on the 28th, Yoon Chang-hyun, a member of the People Power Party, will take the lead in proposing the "Act on Restoring Fairness in the Digital Asset Market and Creating a Safe Trading Environment." The proposal focuses on protecting user assets, prohibiting unfair trading, and imposing self-monitoring responsibilities to regulate unfair trading. It also explains that additional institutional regulatory measures concerning the issuance, listing, disclosure of digital assets, and the entry and business activities of digital asset operators will be supplemented next year, reflecting the discussion directions of relevant international organizations.

Furthermore, the People Power Party’s Policy Committee, Political Affairs Committee, and Digital Asset Special Committee will hold the 4th meeting of the Digital Asset Special Committee with the opposition party on the 2nd of next month to hear opinions from experts, virtual currency exchanges, and financial authorities.

The industry has generally evaluated this basic law enactment movement positively. A representative from an exchange said, "There has been ongoing discussion within the industry about the need to legally define what should and should not be done," adding, "While there may be disagreements when it comes to the details of the bill, the atmosphere is welcoming the very fact that a basic law is being created."

However, voices have also emerged stating that since the proposed bill focuses on regulating unfair trading, additional legislation should include measures to promote the digital asset industry. Another exchange representative said, "It is positive that the basic law related to virtual currency is being initiated," but added, "Since it starts with investor protection, I hope that future provisions on industrial promotion, such as corporate investment participation, will also be included in the basic law."

Until now, there has been strong demand within the related industry for the enactment of a basic law on virtual currencies. Currently, only money laundering is addressed under the Act on Reporting and Using Financial Transaction Information, so there has been no clear legal basis for the industry or financial authorities to manage and supervise the digital asset market. Lee Seok-woo, CEO of Dunamu, also expressed regret during this month’s National Assembly audit of the Financial Services Commission by the Political Affairs Committee, saying, "I have visited the National Assembly and government for five years, but it is very unfortunate that practical acceptance of opinions and full-fledged discussions have not taken place."

The proposed bill defines digital assets as electronic certificates that have economic value and can be electronically traded or transferred. It prohibits unfair trading acts including the use of undisclosed important information, price manipulation, and fraudulent trading, and imposes autonomous continuous monitoring and reporting obligations on digital asset operators. The Financial Services Commission will establish a Digital Asset Committee and may take measures such as ▲corrective orders ▲warnings ▲cautions ▲partial or full suspension of business ▲notification to investigative agencies or prosecution if digital asset operators or stakeholders violate the law. For executives and employees, it may require ▲recommendation for dismissal ▲suspension of duties for up to six months ▲disciplinary warnings.

Additionally, property acquired through unfair trading will be confiscated or recovered, and illegal actors may face imprisonment for more than one year or fines amounting to three to five times the profits gained or losses avoided due to violations. If the profit or avoided loss exceeds 5 billion KRW, life imprisonment or imprisonment for more than five years may be imposed; if it is between 500 million KRW and 5 billion KRW, imprisonment for more than three years may be applied.