Byline: Hannah Parker
About 30% of all cryptocurrency trades worldwide are conducted in South Korea, where even the financial sector is generating headlines for its enthusiasm for blockchain. The cryptocurrency exchange scene in South Korea, which features companies like Bithumb, Upbit, Coinone, and others, is also gaining momentum. The South Korean crypto community is thriving, and there is intense competition among the more than 20 crypto exchanges for a larger market share. Over 150 online businesses accept cryptocurrencies as payment, and 10% of South Koreans have already started using them.
The nation led the world in Bitcoin trading in 2017, accounting for more transactions per person than any other nation. Only 0.6% of people on Earth live in this country. However, as a producer and a leader in adopting new technologies, Korea has enormous influence in the world regarding economics and technology.
South Korea to Safeguard Investors of Cryptocurrency
In response to the failure of Terra LUNA and the bankruptcy of FTX, South Korean authorities are submitting additional amendments to the Digital Assets Bill in an effort to exert more control over cryptocurrency exchanges. This was mentioned on Korean News 1, which outlined the plans for improved cryptocurrency regulation.
Congressman Yoon Chang-Hyun is proposing a bill to give financial authorities more power in order to prevent crises like the FTX collapse from occurring again. Chang-Hyun allegedly wants to increase the authority of the country’s Financial Services Commission and Financial Supervisory Service in place of Bitcoin exchanges “self-regulating.”
The necessary division of consumer deposits is mandated by the recent amendment to the Digital Assets Act. Additionally, it gives financial regulators more authority over deceptive business practices.
In order for investors to be protected from multimillion-dollar losses like those caused by Terra LUNA, regulators can watch over and audit cryptocurrency projects and exchanges. The founder of Terra, Do Kwon, is still at large despite his protestations and has been charged with fraud as a result of the failure of the UST stablecoin. It is crucial to note that South Korean prosecutors issued an arrest warrant in collaboration with Interpol in order to capture Do Kwon.
This is a collaborative effort. Other regulators around the world have called for more stringent rules, citing Terra and FTX as examples. The United States is spearheading these initiatives and has scheduled hearings to better understand the situation.
Prohibition Against Exchanges Using Client’s Money
The Digital Assets Law also prevents Bitcoin trading platforms from unlawfully seizing their users’ deposits once they have been transferred to a custodial institution, unlike FTX and Alameda Research.
By removing cryptocurrency exchanges’ “self-regulatory” capacity to take “required steps” in the event of extraordinary price variations or trading volume variations, the new law further cedes control of such businesses to financial regulators.
Exchanges must notify the Financial Supervisory Service Governor as soon as any unfair behavior is noticed. To prevent fraud, money laundering, and other crimes, the governor will take the appropriate measures.
The amendment to the Act “was introduced to reflect on the FTX incident and prevent a recurrence,” according to an unnamed National Assembly official.
FTX Collapse Creates More Safeguards in Crypto
Crypto experts at Bitcoin XBT iFex 360 AI mentioned in an interview that FTX left room for discussions around stronger regulations in crypto that would prevent this from happening in the future.
Four attorneys contend that Bankman-Fried’s pursuit of law enforcement while surreptitiously taking huge risks with consumers’ money points to a significant regulatory void in the crypto industry. Former prosecutor and director of CFTC enforcement Aitan Goelman, a lawyer at Zuckerman Spaeder, said: “It’s a patchwork of worldwide regulators – and even locally, there are enormous gaps.” This is due to a regulatory framework that took too long to change in response to the growing market of cryptocurrencies.
The SEC is concerned that cryptocurrency firms are operating illegally outside of US security laws and relying instead on alternative licenses that provide minimal consumer protection, according to a source familiar with the agency’s views on cryptocurrency regulation. “Those depictions, while ostensibly true, don’t cover their activities,” the source retorted.
This creates a path for further regulations by individual states and corporations. Regulations could include licenses and policies to safeguard investors better.
The calls for regulation increase each time there is a significant crypto crisis, but it’s the kind of legislation that counts. However, there is still a conflict between safety and freedom regarding cryptocurrencies. Regulating cryptocurrency businesses to make sure they are trustworthy organizations would move them closer to the established financial system, which is a big no-no for supporters of the technology.
Since cryptocurrencies are still in their infancy, many governments have changed their industry regulations. Following the FTX scandal, there are currently about 16 bills on digital assets in the South Korean National Assembly. The FTX collapse has many countries rethinking existing legislation surrounding cryptocurrency and leaves observers thinking that perhaps the FTX collapse was needed as it will bring positive legislative changes to DeFi.
