South Korea has announced harsh punishments, including potential life imprisonment, for those who violate the country’s new cryptocurrency regulations starting on July 19th. The “Virtual Asset User Protection Act” aims to eliminate illegal acts like market manipulation and safeguard user deposits.
According to South Korea’s Financial Services Commission (FSC), violations of the forthcoming crypto law could lead to at least one year in prison or fines 3-5 times the amount of ill-gotten gains. Those earning over 5 billion Korean won ($3.76 million) illegally could even face life sentences or forfeit double their proceeds.
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Crypto violators could face lifetime in prison
Lawmakers passed the reform bill in July 2023 with a one-year grace period to allow companies to establish compliance procedures. It mandates that crypto service providers store over 80% of user deposits in cold wallets to add protection. They must also enroll in insurance programs that enable compensation for consumers impacted by security breaches.
The FSC said the law targets using undisclosed information for crypto investments, manipulating prices, fraudulent transactions, and other illicit activities, all of which may now trigger criminal penalties instead of just fines. Harsher rules also aim to stabilize the market and shield consumers.
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South Korea’s new crypto punishments represent the first phase of reform, establishing a broader regulatory framework. A second law currently in development will standardize token issuance and disclosure for crypto investors once it is approved.
So while the country’s latest crypto penalties seem harsh, they form part of a broader push to clean up rising digital asset scams. With legislation extending consumer protections and promoting integrity, lawmakers aim to enable the industry’s responsible growth in South Korea over the long run.