To better regulate the crypto market, South Korea implemented its Virtual Asset User Protection Act (VAUPA) on 19 July 2024.
According to a press release from the country’s Financial Services Commission (FSC), the VAUPA “intends to establish a sound order in the virtual asset market and ensure protection for users.”
Under VAUPA, cryptocurrency exchanges will have to implement stringent security protocols to protect users from cyber threats and hacking attempts. The exchanges are also required to obtain insurance coverage.
JUST IN: 🇰🇷 South Korea Passes Law to Protect Crypto Investors, Strengthening Current Rules.
– Act defines digital assets as electronic tokens with economic value.
– Assets can be traded or transferred electronically.
– It excludes #NFTs & #CBDCs. pic.twitter.com/P39aD4UuHE— Bitinning (@bitinning) July 19, 2024
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South Korea’s VASPs Had A Year To Prepare For VAUPA Implementation
This landmark legislation aims to provide a robust framework for the protections of virtual asset users. It is focused on ensuring greater transparency, security, and trust in the cryptocurrency ecosystem.
Moreover, the virtual asset service providers (VASPs) were given a year to prepare for VAUPA implementation in South Korea.
“Considering the importance and urgency of providing safe protection for users, the Virtual Asset User Protection Act was enacted on 18 July 2023, reflecting key provisions proposed under 19 legislative bills that were pending at the National Assembly.” The regulators said. “For about one year since then, subordinate regulations have been drawn up, and VASPs were given the time needed to prepare for the implementation of the Virtual Asset User Protection Act from 19 July 2024.”
With VAUPA, South Korea is hoping to attract institutional investors who were previously hesitant to enter the cryptocurrency market.
The investor sentiment in South Korea’s crypto market continues to struggle, despite recovery indications.
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FSC Chief Nominee Cautions Against Allowing Crypto Transactions For Corporation Bank Accounts
On 22 July 2024, the Korea Times reported that Kim Byoung-hwan, who was nominated as the FSC chief earlier this month, warned against allowing corporations to hold bank accounts for transactions of cryptocurrencies.
Byoung-hwan, who is also a former vice finance minister said, “Taking into consideration the chaos we have experienced in the virtual asset market in the past, the current policy should prioritize investor protection.”
Kim said there should be consideration about “whether the permission for corporations or institutions would be appropriate.”
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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