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The South Korean government announced that it will implement the “Virtual Asset User Protection Law” on July 19. The new law aims to protect cryptocurrency users by prohibiting market manipulation, illegal transactions and the use of undisclosed sensitive information.
According to the implementing decree and supervisory regulations, market manipulation, illegal trading and the use of undisclosed material information regarding virtual assets are strictly prohibited.
Violations may result in criminal penalties, including imprisonment of not more than one year or a fine of not less than three times and not more than five times the amount of unjust enrichment. If the amount of ill-gotten gains is more than 5 billion won, a maximum penalty of life imprisonment and a fine equivalent to twice the amount of ill-gotten gains may also be imposed.
Fines may be imposed after the Financial Services Commission (FSC) reports the charges to the Attorney General and receives notification from the Attorney General of the results of the investigation and the status of the person subject to the fine.
In addition, to cover liability for accidents such as hacking and computer malfunctions, virtual asset operators have to subscribe to insurance or deduction with a compensation limit of more than 5% of the economic value of virtual assets, excluding virtual assets stored separately in the cold wallet.
*This is not investment advice.