Korean regulators introduce new framework to protect cryptocurrency investors


Some jurisdictions have recently taken regulatory measures to curb cryptocurrency asset investment concerns. South Korea is among the many countries participating in this movement. The government is making some recommendations to protect cryptocurrency investors.

We also published some guidelines for companies operating in South Korea’s cryptocurrency industry. The National Assembly has received a report from the Financial Services Commission (FSC) on new cryptocurrency regulations.

According to report, lawmakers are pushing for steps that could help curb some slippery areas related to crypto trading. Therefore, the regulation aims to eliminate cryptocurrency trading, insider trading, and pump and dump setups.

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Korea already has capital market laws governing the cryptocurrency industry. However, enforcement will become more stringent once the new regulations come into force. In addition, penalties for non-compliance will be strengthened.

Licensing features different aspects depending on the expected risk potential. This allows cryptocurrency exchanges and coin issuers, especially companies involved in initial coin offerings. The National Daily received a comparative analysis report of the Virtual Property Industry Act on Tuesday.

Cryptocurrency regulatory process flow

The legislative compilation outlines the pattern and flow process for the new crypto regulations. The company on cryptocurrency issuance first forwards the project white paper to the FSC.

The document will also contain information about company employees. Finally, they list all the ICO creation funds and their spending plans for the potential risks of the project.

In addition, the company must first notify the FSC before making any changes or updates to the project white paper. Regulators are required to receive advance notice one week prior to any changes taking effect.

Likewise, not all foreign companies are exempt from this rule. To trade coins on exchanges in Korea, you must also comply with the regulations in the white paper.

The current market actually requires sophisticated regulation of coin issuers. Therefore, using a robust and reliable licensing system can provide adequate protection for crypto transactions.

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The sharp drop in the price of the Terra protocol has fueled a detailed market crash. Kwon Do-young, the creator of the project and a Korean, is likely to attend the National Assembly to clarify the case.

Licensing reports also work to mitigate some coin issues and objectionable transactions suspected to be related to the exchange. Over the years, most of these companies have been accused of engaging in price manipulation, insider trading, impersonation trading and other nefarious operations. The report therefore envisions an in-depth regulation of these measures.

The FSC regulatory process also appears to apply to stablecoins. This was before the challenge of Tether (USDT), TerraUSD (UST) and Day (DEI) last week.

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Regulatory requirements for stablecoins hinder asset management. It measures the number of tokens issued and the use of collateral.

Featured image from Pexels, chart from TradingView.com

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