According to reports, South Korean authorities have launched an emergency study to assess the effects of cryptocurrencies on the economy, particularly in light of the recent TerraLuna crash. As part of the emergency assessment program, South Korean financial authorities, the Financial Services Commission (FSC) and Financial Supervisory Service (FSS), will analyze the effects of cryptocurrencies, which will lead to the enactment of a new law to guide crypto activities, termed the “Digital Asset Basic Act.”
The law is slated to go into effect in 2024 and will affect how individuals use cryptocurrencies in South Korea, although it is unclear whether the new regulation will also apply to crypto exchanges.
The emergency study began recently owing to LUNA’s market crash, with financial authorities evaluating measures to protect residents from the downside of crypto activities. Do Kwon, a South Korean citizen, designed LUNA to be tied to a stablecoin, which is its sister coin, UST (TerraUSD).
Crypto assets are not currently regulated in South Korea, although regulations have been put in place to prevent money laundering using cryptocurrencies.
According to local reports, at least 200,000 South Koreans invested in TerraUSD and Luna. The authorities are currently unable to intervene because local statutes primarily address money laundering.
The proposed law was first announced in March 2022, but the LUNA crisis has prompted authorities to focus on crafting a viable law, which is the Digital Asset Basic Act, as soon as possible.
As a result of the crisis, financial authorities are developing initiatives to educate citizens about the risks associated with cryptocurrencies.
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