Republic of Korea: Adopted Virtual Asset User Protection Bill

On 30 June 2023, the National Assembly of Korea adopted the Virtual Asset User Protection Bill including consumer protection regulation. The Law 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 law introduces several obligations like among other things the prohibition of insider trading, price manipulation, false statements, and important omissions by providers. Furthermore, the Law determines that deposits and withdrawals cannot be blocked without valid reasons. Further, virtual asset operators are subject to obligations like 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. The Law will be implemented one year after its official promulgation.