South Korean Regulators Unveil New Frameworks to Protect Crypto Investors
Some jurisdictions have recently implemented regulatory measures to limit the challenges of investing in cryptocurrency assets. Among the many countries affected by this movement is South Korea. The government makes some recommendations that will serve as protection for investors in cryptocurrencies.
Additionally, it has issued guidelines for companies operating in the South Korean crypto industry. The National Assembly received a report from the country’s Financial Services Commission (FSC) regarding the new cryptocurrency regulations.
According to the report, lawmakers are pushing measures that could help reduce some slippery areas around crypto transactions. Therefore, the regulations aim to eliminate crypto-laundering operations, insider trading, and pump-and-dump setups.
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South Korea already has the Capital Markets Law that governs its cryptocurrency industry. However, once the new regulations come into force, their application will be stricter. In addition, the sanctions would be more severe in case of non-compliance.
The authorization will have different aspects depending on the possibility of foreseen risks. Therefore, they will license crypto exchanges and coin issuers, especially companies involved in initial coin offerings. The country’s newspaper received the Virtual Property Industry Law Benchmarking Report on Tuesday.
Flow for the Cryptocurrency Regulation Process
A compilation of legislation outlines the model and flow process for new crypto regulations. Cryptocurrency-issuing companies would first submit a white paper of their project to the FSC.
In addition, your documentation would contain information about the company’s personnel. Finally, they would list their spending plans for all of their ICO-generated funds and the potential risks of the project.
Additionally, before making any changes or updates to their project white paper, companies must first notify FSC. The regulator must obtain prior information one week before the changes can be applied.
Similarly, not all foreign companies are exempt from the rule. Once they intend to trade their coins on exchanges in South Korea, they must also comply with the white paper regulations.
In fact, the current market requires elaborate regulations for coin issuers. Therefore, the use of a strong and reliable licensing system would provide adequate protection for crypto transactions.
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The sudden drop in Terra Protocol prices had catalyzed a detailed market crash. Do Kwon, the founder of the project and a South Korean, is expected to face the National Assembly for an explanation of this event.
Additionally, the Licensing Report strives to mitigate unsavory transactions allegedly related to certain coin issues and exchanges. For several years, most of these companies have been accused of engaging in price gouging, insider trading, shell trades and other shady dealings. For this reason, the report foresees an exhaustive regulation of these actions.
The FSC’s regulatory processes also appear to be related to stablecoins. This was before the Tether (USDT), TerraUSD (UST), and Dei (DEI) challenges last week.
The cryptocurrency market falls again | Source: Total Crypto Market Cap at TradingView.com
The regulatory requirement on stablecoins would overlap with their asset management. This would measure the number of tokens minted and their collateral use.
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