The South Korean government has announced that the Virtual Asset User Protection Act (VAUPA), its new regulations concerning cryptocurrencies and other related technologies, will come into full effect on July 18, 2024.
The Financial Services Commission (FSC), in a recent press release, noted that these regulations aim to safeguard citizens’ digital assets, prevent unfair trading practices in the crypto market, and empower the financial watchdog to oversee and penalize digital asset markets and local businesses.
Per the latest rules, the government will entirely ban illegal trading, the refusal to disclose essential information about digital assets, and market manipulation. Notably, individuals found guilty of violating these rules and causing losses exceeding 5 billion won (~$3.8 million) through illegal virtual asset trading schemes may face life sentences from prosecutors. The new law also imposes severe criminal penalties and fines, including fines of three to five times the amount of stolen funds.
The FSC also noted that it had released its two guidelines for enforcing the new regulations—the “Enforcement Decree of the VAUPA” and the “Virtual Asset Industry Supervision Regulations”—on December 11, 2023.
The Virtual Asset User Protection Act was passed in June in response to a major crypto market meltdown associated with Terraform Labs and its former CEO, Do Kwon, a South Korean citizen. The 2022 collapse of Terraform Labs and its virtual currencies resulted in a substantial loss of over $450 billion in the overall crypto market.
Do Kwon is currently in custody in Montenegro and faces extradition to the US rather than South Korea, where he is charged with eight criminal counts.
Meanwhile, the Montenegrin government recently granted the request to extradite Kwon’s associate and former CFO, Hang Chang-joon, to South Korea for prosecution.
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