Phase 2 of the South Korea Virtual Asset User Protection Act is being Developed

By creating a stablecoin regulatory framework and a virtual asset disclosure system, South Korea‘s Financial Services Commission (FSC) is making important advancements in the regulation of cryptocurrencies. The nation wants to strengthen investor safety and improve oversight of the quickly developing virtual asset market, hence the action.

Phase 2 of the South Korea Virtual Asset User Protection Act is being Developed

The recently passed Virtual Asset User Protection Act, praised as a first-step bill, reportedly places a strong emphasis on defending the interests of investors in the cryptocurrency industry, according to News1. The Phase 2 Act, which will include a comprehensive set of regulations linked to the issuing of virtual assets and the regulatory framework controlling various types of cryptocurrencies, is being developed by the FSC in order to build upon this initial legislation.

The Function of the FSC

The FSC has started a research service to examine the National Assembly’s thoughts and recommendations regarding virtual assets in order to establish a strong regulatory framework. The problem of potential conflicts of interest during the issuance and distribution of virtual assets by cryptocurrency operators is one of the crucial elements being looked at. The FSC seeks to improve the environment for investors and market participants by confronting these potential conflicts head-on and establishing a system that is more open, responsible, and safe.

The FSC intends to draw up a regulatory framework that takes into account the peculiarities and traits of various cryptocurrencies about the specific forms of virtual assets. Stablecoins, which are digital assets linked to a stable reserve, as well as security tokens and utility tokens—each with distinctive attributes that call for adequate regulatory oversight—will be included in this.

Furthermore, the FSC is considering legislation that could change the burden of proof in the event of unanticipated mishaps or accidents in the cryptocurrency field. The goal of this strategy, like that of the Electronic Financial Transaction Act, is to clearly define liability and obligation in the event of any unfavorable events.

Robust Regulatory Framework Positively Impacts South Korea

The South Korean financial authorities continue to place a high premium on safeguarding investor protection and market integrity as the cryptocurrency industry develops. The creation of a strong regulatory framework is anticipated to aid in the country’s virtual asset ecosystem’s steady development and maturity.