- South Korea begins second stage of virtual asset legislation, focusing on market order and user protection.
- The Financial Services Commission (FSC) held a task force meeting to discuss aspects to be included in the new legislation.
- The legislation aims to address issues related to the issuance of virtual assets, regulation of stable coins, and conflict resolution.
South Korea has it’s financial authorities initiating research services for the second phase of legislation around virtual assets. The move follows the recent passing of the ‘Act on the Protection of Users of Virtual Assets’ by the National Assembly.
The legislation aims to protect users and regulate unfair trading practices in the virtual asset market, with an additional focus on issues like virtual asset issuance and financing. According to reports, the Financial Services Commission (FSC) convened a digital asset task force working group meeting on the 3rd of this month.
The meeting addressed the recently passed Virtual Asset User Protection Act and laid the groundwork for further legislation to institutionalize virtual assets comprehensively. An officer has remarked,
“There was a discussion about what should be included in the second-phase legislation,”
The first bill related to virtual assets includes measures for user asset protection and the regulation of unfair trading practices. It also grants authority to financial authorities for supervision and sanctioning of the virtual asset market.
The National Assembly has mandated the FSC to conduct research for second-stage legislation. This includes devising methods to resolve conflicts of interest arising during the issuance and distribution of virtual assets, which will have to be submitted to the standing committee.
The research for the second phase is expected to include plans to address conflicts of interest and a regulatory framework for stable coins. Moreover, a system for virtual asset evaluation, and standards for the uniform issuance and distribution of virtual assets will be placed as well.
Additionally, the task force meeting discussed the process of creating sub-statutes, such as enforcement decrees, to further detail the Virtual Asset User Protection Act. A concern has been raised regarding the vagueness of applying regulations to virtual asset deposit and operation operators.
The FSC is considering regulation through enforcement decrees to address potential loopholes. The second stage of legislation represents a significant step in integrating the virtual asset industry into the institutional framework, with an emphasis on protection and fairness.