Republic of Korea: Implemented Act on Protection of Virtual Asset Users

On 19 July 2024, the Act on Protection of Virtual Asset Users entered into force. The Act applies to all acts affecting Korea, even if carried out abroad, involving virtual assets and virtual asset operators, except in cases expressly provided for in other laws. The Act introduces several obligations, such as the prohibition of insider trading, price manipulation, false statements, and important omissions by providers. Furthermore, the Act determines that deposits and withdrawals cannot be blocked without valid reasons. Further, virtual asset operators are subject to obligations such as maintaining a separation of business and client assets and offline storage. In addition, service providers are required to possess the means to reimburse users in the event of hacks or system failures. They must also maintain transaction records for a period of 15 years. Breaching the regulations carries penalties such as imprisonment for a minimum of one year and fines ranging from three to five times the unjust gains. Stricter punishments, including up to ten years in prison, are imposed for violations specifically related to the trading of self-issued cryptocurrencies.