Strengthening Reporting and Disclosure Obligations... Establishment of Priority Repayment Claim Rights
On the 5th, Kim Hyun-jung, a member of the Democratic Party of Korea, announced that she had introduced a bill to amend the "Virtual Asset User Protection Act," which strengthens the reporting and disclosure obligations of virtual asset service providers, on the 3rd.
The current law includes various regulations to protect users' assets by virtual asset service providers, but there is no obligation to report or disclose to financial authorities when incidents that significantly affect business operations, such as system failures or hacking, occur.
In addition, there have been criticisms that user protection is insufficient because the legal right for users to be given priority in the return of virtual assets held by virtual asset service providers is not clearly stipulated.
Accordingly, Representative Kim Hyun-jung introduced the Virtual Asset User Protection Act. The bill mandates that when virtual asset service providers experience incidents that significantly affect business operations, such as hacking or system failures, they must immediately report to the Financial Services Commission and disclose the information to users through their internet homepage, etc. Through this, users can quickly grasp information and respond when accidents occur.
The proposed bill also establishes a priority return claim right, explicitly granting users the legal right to be given priority in the return of assets entrusted to virtual asset service providers. This ensures that users' assets are protected as a top priority even in situations such as deterioration of the virtual asset service provider's business condition or bankruptcy.
Representative Kim Hyun-jung emphasized, "As the virtual asset market is rapidly growing, it is more important than anything else to secure market transparency and safety to enhance user trust," adding, "Through this bill, we will strengthen the responsibilities of virtual asset service providers and establish user protection measures to create a healthy virtual asset market ecosystem."
She continued, "We are also preparing bills for damage compensation and system safety enhancement to protect users in case of accidents," and urged, "I hope that financial authorities and the industry will cooperate to prepare practical measures for user protection and market stabilization."
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