Agreement Between Ruling and Opposition Parties on Priority Legislation for User Protection
Differences on Digital Currency Application to Be Discussed Later
Amid the recent arrest of Kwon Do-hyung, CEO of Terraform Labs and the main culprit behind last year's cryptocurrency market crash known as the 'Terra·Luna incident,' the passage of the Virtual Asset Act, which regulates the cryptocurrency industry in South Korea, is gaining momentum. The ruling and opposition parties have agreed to prioritize enacting regulations on unfair trading practices and user protection, with the 'Virtual Asset Act' expected to be passed during the April extraordinary session of the National Assembly.
According to the National Assembly on the 29th, the Political Affairs Committee reviewed 18 bills related to virtual assets, including the 'Act on the Protection of Cryptocurrency Users' proposed by Kim Han-kyu of the Democratic Party, at the first subcommittee meeting on bill examination held the previous day. Members of the ruling and opposition parties on the Political Affairs Committee agreed to prioritize enacting parts where consensus is possible into law first, and discuss the remaining issues later through a 'phased legislation' approach. This marks 22 months since virtual asset-related bills were first introduced in the National Assembly in May 2021. Yoon Chang-hyun of the People Power Party stated, "Rather than combining all 14 items, we plan to merge about three into the first phase, then proceed to a second phase with a more expanded form," adding, "It is expected to be approved within April."
The 18 proposed virtual asset laws vary greatly, and due to many differing opinions among the Political Affairs Committee members, discussions had not even begun. For example, the bill proposed by Kim Byung-wook of the Democratic Party emphasized the development of the blockchain industry, whereas Baek Hye-ryun of the Democratic Party prioritized introducing regulations on unfair trading of virtual assets to protect users.
Therefore, the subcommittee conducted a clause-by-clause review of the bills in a detailed examination format. After sharing the definition and scope of virtual assets, they agreed to reflect these in the bills. Regarding user protection, it was decided to include provisions on the deposit and trust of customer funds, custody of virtual assets of the same type and quantity, and the establishment of insurance, mutual aid, and reserve funds to prepare for accidents. Provisions to regulate unfair trading practices in the virtual asset market, such as prohibiting the use of undisclosed material information, market manipulation, and fraudulent trading activities, are planned to be discussed later.
Additionally, there were differing opinions on whether to apply regulations if the Bank of Korea issues a digital currency (CBDC), so it was agreed to review this matter later in April.
Thus, the approach is to first enact common provisions contained in each bill into law and then reconcile differences. Representative Yoon explained, "Too many laws have been discussed simultaneously, and attempting to establish a basic law all at once became too vast. The intention is to divide this law into phases and expedite its passage." Representative Oh Ki-hyung of the Democratic Party added, "The scope of discussion on the basic framework has been finalized, and a detailed examination based on this premise has been conducted, so significant progress has been made."
The Political Affairs Committee is expected to proceed with the passage of the Virtual Asset Act next month. Previously, the committee decided to hold a public hearing in April to discuss the Virtual Asset Act. Accordingly, it is anticipated that the schedule for the public hearing, as well as subsequent subcommittee and plenary sessions, will be coordinated.
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