South Korea’s Financial Services Commission (FSC) announced on Wednesday, revealing that individuals involved in illegal activities within the cryptocurrency market could be subject to criminal penalties, including life imprisonment. This will occur when the country’s new cryptocurrency law starts on July 19.
According to the FSC’s statement on Wednesday, anyone breaking this new cryptocurrency law could face at least one year in jail or pay fines three to five times the amount of the illegal profit made. For those who make more than 5 billion Korean won ($3.76 million) from such unlawful activities, the punishment could be as severe as a life sentence or fines up to twice the amount of their ill-gotten gains.
In July 2023, South Korean legislators passed the “Virtual Asset User Protection Act,” which includes one year for adjustment. This law is designed to eliminate illegal activities in the crypto market, such as trading based on secret information, manipulating market prices, and conducting fraudulent transactions.
The law also mandates that cryptocurrency service providers must store over 80% of customer deposits in cold storage, which is a way to protect funds by keeping them offline. Additionally, these providers must sign up for insurance programs to potentially compensate users in case of security breaches.
This new law is part of a broader two-step legislative effort to create a comprehensive set of regulations for the cryptocurrency industry in South Korea. The second part of this legislative effort, which is still being worked on, will focus on creating standards for issuing crypto tokens and ensuring that investors are given reliable information.
