After the collapse of Terra LUNA and the failure of FTX, South Korean officials are proposing new changes to the Digital Assets Bill to give them more control over cryptocurrency Projects.
Congressman Yoon Chang-Hyun is working on an amendment to give financial authorities more control so that things like the FTX collapse don’t happen again.
Local news source News 1 says Chang-Hyun wants to give the country’s Financial Services Commission and Financial Supervisory Service more power “instead of letting cryptocurrency exchanges self-regulate.”
South Korea Is Trying to Prevent Another Crash Like FTX So That Investors Can Feel Safe
The new change to the Digital Assets Act says that customer deposits must be kept separate. It also gives financial authorities more power to stop unfair business practices.
This means that regulators will be able to control cryptocurrency projects and exchanges and check them out to protect investors from big losses like the ones Terra LUNA caused.
South Korean prosecutors worked with Interpol to get a warrant for the arrest of Terra’s founder, Do Kwon, who is still on the run, even though he denies being a fraudster. This is because of the collapse of the UST stablecoin.
This is not a single attempt. Using Terra and FTX as examples, other regulators around the world have asked for stricter laws. The United States is in charge of these efforts and has set up hearings to learn more about what is going on.
Cryptocurrency Exchanges Won’t Be Able To Use Their Clients’ Money
Another important change to the Digital Assets Law is that cryptocurrency trading platforms will no longer be able to take their users’ deposits after they have been sent to a custodian institution. This is what happened with FTX and Alameda Research.
Also, the new law takes away cryptocurrency exchanges’ ability to “self-regulate” by taking “appropriate measures” if the price or trading volume changes in a way that isn’t normal. This gives financial authorities control over these kinds of activities.
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Now, exchanges will have to report any unfair behavior right away to the Governor of the Financial Supervisory Service. The Governor will be in charge of taking the right steps to stop fraud, money laundering, and other crimes.
An unnamed member of the National Assembly said that the Act was changed “to think about what happened with FTX and stop it from happening again.”