South Korea To Amend Its Legal Provisions to Control Crypto Projects Better

South Korea

Yoon Chang-Hyun wants to amend the law from South Korea to prevent another FTXlike scenario from happening.

On the heels of the Terra LUNA meltdown and the bankruptcy of FTX, authorities from South Korea are proposing new amendments to the Digital Assets Bill seeking greater control over cryptocurrency exchanges.

Congressman Yoon Chang-Hyun is preparing an amendment to expand financial authorities’ control capabilities to prevent repeated events such as the FTX collapse.

According to local media outlet News 1, Chang-Hyun proposes granting more authority to the country’s Financial Services Commission and Financial Supervisory Service for self-regulating cryptocurrency exchanges.

“Rep. Yoon Chang-Hyun of the People Power Party plans to propose a revision of the secure digital asset transactions bill at the first legislative review subcommittee of the National Assembly’s Political Affairs Committee held on the same day.”

The new amendment to the Digital Assets Act calls for the mandatory separation of customer deposits. It also gives greater control to financial authorities against unfair trading practices.

This means that regulators can supervise and inspect cryptocurrency projects and exchanges to protect investors from million-dollar losses such as those caused by Terra LUNA.

It is worth mentioning that South Korean prosecutors issued an arrest warrant in conjunction with Interpol to capture Do Kwon, Terra’s founder, who is still on the run —even though he denies it— after being accused of fraud due to the collapse of the UST stablecoin.

This is not an isolated effort. Other regulators worldwide have asked for stricter laws using Terra and FTX as examples. The United States is leading these efforts, setting hearings to understand the situation better.

Another significant amendment to the Digital Assets Law is that cryptocurrency trading platforms will not be able to arbitrarily seize their users’ deposits once they have been sent to a custodian institution, which happened with FTX and Alameda Research.

In addition, the new law eliminates the “self-regulatory” power of cryptocurrency exchanges to take “appropriate measures” in case of irregular fluctuations in the price or trading volume, passing the control of such activities into the hands of financial authorities.

Exchanges will now be required to immediately report any unfair activity to the Governor of the Financial Supervisory Service, who will be responsible for taking appropriate measures to prevent fraud, money laundering, or any other crime.

An unidentified National Assembly official stated that the amendment to the Act “was introduced to reflect on the FTX incident and prevent a recurrence.”

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