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Regulators stressed the need to have a regulatory framework in place during a meeting of South Korea’s National Assembly, given the failure of multi-billion dollar cryptocurrency exchange FTX, CoinDesk Korea reported on Monday.
The grouping was a follow-up to an emergency meeting held to protect investors after the collapse of Terraform Labs in May, the report said.
“As the market fell due to global austerity, Terra-Luna, Celsius and FTX failed one after another, making it a year of declining trust,” Lee Myung-soon, senior vice president of the Financial Supervisory Service (FSS), said at the meeting.
Kim So-young, vice chair at the Financial Services Commission (FSC) added that considering the urgency of protecting users, it was better to have minimum necessary regulatory standards in place and add to them, rather than waiting for international standards.
The FSS is responsible for examining and supervising financial institutions, under the broad oversight of the FSC which makes financial policy.
Kim said that the FTX crisis revealed the need to have regulatory mechanisms to prevent unfair trade and ensure virtual asset service providers fulfil obligations to protect user assets, and to forbid service providers from issuing tokens.
South Korea’s government officials are currently drawing up a comprehensive regulatory framework, the Digital Asset Basic Act, expected to be finalized next year. The act will be formed from 13 crypto legislative proposals currently before the National Assembly.
“Considering the rapid change in the digital asset market, the Financial Supervisory Service will actively support legislation through monitoring, so that overall regulations such as digital asset disclosure can be prepared,” Lee said.
Read more: South Korea's Financial Watchdog to Expedite New Crypto Rules: Report
Jey Kim contributed reporting.