The South Korean Financial Services Commission (FSC) issued a report outlining its new definition of cryptocurrency, as well as the proposed procedures for token issuers and penalties for violations.
The proposed rules may impose onerous regulations on individuals or platforms for trading non-art NFTs and decentralized financial projects.
The FSC report on November 23 detailed its project in the “Cryptocurrency User Protection Act”, which has been submitted to the National Assembly for deliberation.
It sets rules for token issuers who wish to trade tokens on Korean exchanges and recommends penalizing those who are deemed by the FSC to “make improper profits through market manipulation or trading with undisclosed information”.
The report first involved the token issuance business, including ICO operators, Decentralized autonomous organization (DAO) and non-fungible token (NFT) minting services (and possibly other services).
The FSC will require these entities to submit a white paper, obtain a good rating from a recognized token evaluation service, obtain a legal review of the project, and disclose regular business reports to users.
Previously, FSC did not regard NFT as a regulated asset, but That decision changed Earlier this week. It also considers privacy tokens such as Monero (XMR), while stable currencies such as Tether (USDT) will become cryptocurrencies, while Central Bank Digital Currency (CBDC) will not.
Failure to comply with the rules will result in at least 5 years’ imprisonment, plus three to five times the amount of “illegal profits”. Improper profits will be regarded as any profits obtained when the company fails to comply with the law. These penalties correspond to the penalties in the current Capital Market Law.
The new proposal is a response to FSC’s assessment that the Special Reporting Act’s ability to thoroughly protect investors is flawed.The bill is leading to Shut down most of the country’s cryptocurrency exchanges Continue to operate due to strict requirements.
A close exchange industry insider told Cointelegraph that these proposals are positive:
“Once the new law is passed, it will further promote the development of the industry and help protect digital asset investors.”