S. Korea’s virtual asset user protection act set to launch

The law aims to establish a secure framework.

The Financial Services Commission (FSC) of South Korea has announced that the Virtual Asset User Protection Act will come into effect on 19 July. The law aims to establish a secure framework in the virtual asset market and safeguard users.

Key provisions of the Act include protecting users' deposits and virtual assets, regulating unfair trading activities like price manipulation, and granting financial regulators authority to supervise and sanction virtual asset service providers (VASPs).

VASPs are required to keep users' virtual assets separate, maintain insurance or reserve funds against hacking, and report suspicious activities to the Financial Supervisory Service (FSS).

The FSC has prepared for implementation by developing detailed subordinate statutes, offering consultations, and conducting pilot tests. The Digital Asset Exchange Alliance and 20 VASPs have established best practice guidelines.

The FSC anticipates the new law will enhance user protection and market order, with severe penalties for unfair trading. Users are urged to remain cautious, as the Act does not eliminate the inherent risks of virtual asset investments.