Seoul crypto murder case leads to tighter regulation in South Korea

• A murder case in Seoul over crypto assets compelled lawmakers to push for stronger crypto regulation.
• The new proposed bill combines 19 distinct crypto-related policies into a single bill.

According to a Bloomberg news report, a murder case over the losses of crypto assets has compelled lawmakers in South Korea to push for stronger crypto regulation.

Towards the end of last month, a woman in the national capital Seoul was kidnapped and then murdered in a dispute that was believed to be related to the losses over crypto assets.

It was just another case in a long line of crypto asset-related scandals, such as the collapse of the Terra Luna ecosystem in May 2022.

The recent murder case has reportedly increased the urgency for parliamentarians to approve South Korea’s first crypto legislation. It could be ratified in a parliamentary vote later this month.

“There is finally a consensus on both sides of the aisle that we need to get a law in place as soon as possible,” Back Hyeryun, a lawmaker from the opposition Democratic Party of Korea, told Bloomberg.

South Korea contemplates bringing in a standalone crypto bill

The new proposed bill is called the Virtual Asset User Protection Bill.  It combines 19 distinct crypto-related policies into a single bill.

According to a draft seen by Bloomberg News, the legislation defines virtual assets. It also establishes penalties for infractions such as the use of non-public information, market manipulation, and unfair trading practices.

It would empower the Financial Services Commission to monitor cryptocurrency operators and asset custody. The Korean central bank would be allowed to investigate such platforms as well.

The act would necessitate insurance against hacking, as well as reserve monies and record-keeping.

These restrictions will apply to crypto tokens such as Bitcoin. At the same time existing capital market legislation would apply to tokens that the government approved.

According to Triple A, 3.8% of South Koreans, i.e. over 1.9 million people, owned cryptocurrency in 2021. Bitcoin peer-to-peer trading activity in South Korea reached record highs of $218 million Korean Won in 2019.