South Korean politician of the People Power Party, Yoon Chang-hyun, proposed amendments to the digital asset safe transaction bill as he believes the existing bill does not guarantee user protection given the recent FTX collapse. Yoon Change-hyun proffered the revision in the bill to the National Assembly Political Affairs Committee on Nov. 22 while conducting a 1st subcommittee to review legislation prepared by lawmakers.
At a time when the cryptocurrency industry was already suffering the catastrophic effects of the long-lasted crypto winter, FTX’s breakdown added fuel to the fire. It shattered investors’ sentiment, with Bitcoin currently trading at around $16,000.
This year, the crypto market has been pulled down two times heavily, with the Terra Luna fiasco in May and now the FTX saga. Alongside disrupting the investors’ spirit on crypto investments, the downfall of crypto projects pushed global authorities to trigger probes and prepare more strict regulations considering the insolvency of crypto platforms.
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The latest proposal by Yoon Chang-hyun focuses on user protection and seeks to empower authorities to inspect crypto exchanges better to prevent FTX-like events in the future. It includes making crypto exchanges keep users’ funds separate from the other funds as per Articles 5 and 6.
Interestingly, FSC accepted the suggestion and added it to the new “Digital Asset Act” as the deposit of users’ funds into a management firm can’t allow operators to arbitrarily seize withdrawals as experienced in the past.
South Korea’s New Crypto Regulations To Give FSC More Authority
The amendment to this bill has passed operators’ control over the platform as a self-regulated system to the FSC. Instead of applying measures of choice amidst abnormal fluctuations of crypto prices, the operators will be liable to follow the authorities’ notified and recommended method.
As cryptocurrency is relatively new, many jurisdictions have been modifying their policies on the crypto sector. around 16 bills on digital assets in total are already circulating in the South Korean National Assembly following the FTX saga.
Initially, new regulations for the crypto sector were supposed to be planned with the Financial Service Commission (FSC) relying on the previous bills prepared by Hye-ryeon Baek, a National Assembly Member of the political affair committee, and Chang-hyeon Yoon, Chairman of the Digital Asset Special Committee.
Hye-ryeon Baek’s bill focuses on bringing transparency in regulating virtual assets trade. On the other hand, the bill proposed by Chang-hyun Yoon seeks “fairness in the digital asset market” to provide investors with a safe trading platform.
Another bill presented by an MP demands new laws to stop crypto exchanges from halting withdrawals or deposits without reporting an authentic cause.
The bill seeks to provide the power of veto to government authorities over a trading platform’s actions like suspending withdrawals. In other words, crypto exchanges would need to get permission from authorities before seizing users’ funds, and the non-compliant companies will face fines of up to $74,000, per bill in the process.