On the heels of the collapse of Terra LUNA and the bankruptcy of FTX, South Korean authorities are proposing new amendments to the Digital Assets Law that seek greater control over cryptocurrency exchanges.
Congressman Yoon Chang-Hyun is preparing an amendment to expand the control capabilities of financial authorities to avoid a repeat of events such as the collapse of FTX.
According to local news outlet News 1, Chang-Hyun proposes giving more authority to the country’s Financial Services Commission and Financial Supervisory Service “rather than self-regulation” of cryptocurrency exchanges.
“Rep. Yoon Chang-Hyun of the People’s Power Party plans to propose a review of the secure digital asset transactions bill in the first legislative review subcommittee of the Political Affairs Committee of the National Assembly to be held on the same day ”.
South Korea wants to protect investors from another FTX-like accident
The new modification of the Digital Assets Law requires the mandatory separation of customer deposits. It also gives greater control to financial authorities against unfair business practices.
This means that regulators will be able to oversee and inspect cryptocurrency projects and exchanges to protect investors from millions in losses like 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, founder of Terra, who is still a fugitive —although he denies it— after being charged with fraud for the collapse of the UST stablecoin. .
This is not an isolated effort. Other regulators around the world have called for stricter laws using Terra and FTX as examples. The United States is leading these efforts, setting hearings to better understand the situation.
Exchanges will not be able to use their clients’ money
Another important 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 custodial institution, which happened with FTX and Alameda Research.
Furthermore, the new law removes the “self-regulatory” power of cryptocurrency exchanges to take “appropriate measures” in the event of irregular fluctuations in price or trading volume, passing control of such activities to 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.
According to an unnamed National Assembly official, the amendment to the Law “was introduced to reflect on the FTX incident and prevent it from happening again.”
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This post South Korea will change its legal framework to better control crypto projects
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