Starting from the 19th, the "Virtual Asset User Protection Act," which regulates various unfair trading practices such as virtual asset price manipulation and fraudulent unfair trading, will be enforced.
The Financial Services Commission and the Financial Supervisory Service announced on the 17th, "We will strengthen cooperation with investigative agencies and related organizations to ensure the effective operation of the Virtual Asset User Protection Act, and actively supplement any shortcomings found after the system is implemented."
The main contents of the Virtual Asset User Protection Act are broadly divided into two parts. First, it establishes a legal basis to protect users. From now on, users' deposits will be safely stored and managed by banks, and virtual asset service providers must pay users a deposit usage fee.
Virtual asset service providers must separate and store their own virtual assets from users' virtual assets, and to fulfill responsibilities arising from incidents such as hacking or system failures, they must subscribe to insurance or accumulate reserves.
A regulatory system for unfair trading practices such as price manipulation will also be introduced. Virtual asset exchanges will continuously monitor abnormal transactions and notify financial authorities if suspicious unfair trading activities are detected.
Subsequently, after investigations by financial authorities and investigative agencies, those who commit unfair trading acts will face criminal penalties including imprisonment for more than one year or fines amounting to 3 to 5 times the illicit gains, and administrative fines equivalent to twice the illicit gains or up to 4 billion KRW.
Once the law is enforced, the Financial Supervisory Service will inspect virtual asset service providers for compliance with user protection obligations, and the Financial Services Commission may impose sanctions such as corrective orders, suspension of all or part of business operations, or fines on virtual asset service providers who violate these obligations based on inspection results.
The financial authorities expect that the enforcement of the law will establish a basic safety net for protecting virtual asset users and enable punishment for unfair trading, thereby establishing market order.
The financial authorities urged, "If users discover suspected cases of unfair trading practices, they should immediately report them to the Financial Supervisory Service’s Virtual Asset Unfair Trading and Investment Fraud Reporting Center, and if they suspect they have been victims of fraud beyond unfair trading, they should promptly report to investigative agencies."
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