South Korean authorities release new guidelines for virtual asset providers in the country. It claims that its decision will help protect investors in the crypto space.
South Korea’s financial services commission (FSC) has sent a modified crypto regulatory policy proposal to the national assembly for scrutiny and approval. Part of the proposal suggests ways to combat gray areas in crypto transactions.
Hence, lawmakers have identified pump-and-dump setups, wash trading, and insider trading as areas that need to be critically examined. The approval of the new policy will bolster the enforcement of the capital markets act. There would now be stricter punishments for non-compliance.
The FSC has made it mandatory for VASPs to be licensed. However, their operating license would depend on the risks related to their offerings. Hence, there would be licensing scrutiny for firms launching their ICOs and other coin issuers and crypto exchanges.
The Flow Process For New Crypto Licensing Approvals
According to the draft submitted to the legislature, there is a flow process for approving new crypto licenses. If any firm plans to issue a crypto coin, their first step is to submit the project’s whitepaper with the FSC.
Part of their white paper would contain information about the staff work environment, remuneration, and other vital details. The FSC would also expect that such companies indicate how they would manage risk and spend funds earned from the ICO sales.
Also, the firms must inform the FSC about any modifications it intends to make to its whitepaper. However, the FSC stipulates that it must receive such notification at least seven days before the changes reflect in the whitepaper.
The FSC also clarified that international firms operating on South Korean shores must adhere to these new rules. It also stated that the same white paper rules for local VASPs apply to these international VASPs.
The current conditions of the crypto market make it necessary to have a proper crypto regulation for all players in the space. Hence, this well-structured licensing system will make investments safe for crypto investors.
New Regulation Will Make Crypto Investments Safer – Fsc
The licensing report is part of the licensing approval for coin issuers and crypto exchanges. The FSC claims it would scrutinize trades by the coin issuers and crypto exchanges to identify whether any transaction didn’t follow due process.
The crypto market has been on a general downturn since the start of the year. However, the terra network crash made the market more bearish.
Hence, it is no wonder that South Korea’s national assembly has summoned Terra founder and CEO, Do Kwon, to explain his role in the network’s crash. Many industry experts claim that Kwon is being summoned because he is a South Korean national, and the authorities won’t want him to stain the nation’s stellar reputation.