Crypto Boom in South Korea Sparks Stronger Customer Protection Measures
Cryptocurrencies and Web3 technologies have taken the world by storm, igniting a global revolution in the financial landscape. Despite facing challenges like scams and market fluctuations, the crypto industry has blossomed into a multi-billion-dollar juggernaut. South Korea, a major hotspot for DeFi and GameFi activities, continues to stand tall in the face of market-altering events and records massive monthly crypto spot trading volumes, worth tens of billions of USD.
However, the rise of crypto-related crimes in South Korea has triggered a proactive response from the nation. On June 30, 2023, the South Korean parliament made history by passing its first digital-asset bill, aimed at bolstering investor protection. Integrating 19 crypto-related bills, the groundbreaking Virtual Asset User Protection Act applies the country’s Capital Market Act to virtual assets with securities attributes. Transgressions like market manipulation and unfair trading practices now face hefty fines or a minimum of one-year imprisonment.
The new legislation empowers the Financial Services Commission to oversee crypto operators and asset custodians while granting the Bank of Korea the authority to investigate such platforms. Moreover, virtual asset service providers (VASPs) must now take responsibility for users’ deposits and offer insurance against potential risks, including hacks and computer failures.
In a recent collaboration to further enhance the crypto landscape, the Korea Securities Depository joined forces with CODE, a joint venture of Bithumb, Coinone, and Korbit. This strategic partnership aims to promote the issuance and use of Legal Entity Identifiers (LEI) for virtual asset operators both domestically and internationally. LEI is a standardized identification system for corporations participating in financial transactions, ensuring efficient management of financial information.
South Korea’s progressive stance in passing the Virtual Asset User Protection Act and collaborating to boost industry standards sets a significant precedent in the crypto world. By fortifying investor protection, ensuring accountability, and fostering innovation, the country is positioning itself at the forefront of the global crypto revolution. Kana Labs, perfectly situated in the right place and time, is now ready to guide South Korean users through a seamless transition from the Web2 to Web3 space, enabling them to explore DeFi and GameFi with ease.
