A report commissioned by the South Korean federal government recommends the domestic crypto industry adopt a licensing system for exchanges and token issuers to protect investors.
The report issued by the Financial Services Commission (FSC) to the National Assembly, the country’s legislature, also calls for new regulations to curb insider trading, pump-and-dump schemes and laundering.
The new regulations would be stricter and the penalties for non-compliance harsher than those of the Capital Markets Act, which the domestic crypto industry currently adheres to.
That Comparative Analysis of the Virtual Property Industry Act The report, obtained exclusively by Korea Economic Daily on May 17, unveils a recommendation to establish a licensing system that would apply to coin issuers such as B. Companies running Initial Coin Offerings (ICO) and crypto exchanges. Depending on the risk, different degrees of licenses would be issued.
Regulating coin issuers through a robust licensing system is considered the “most needed protection” in the market today. This position could be underscored by the premature market crash sparked by the collapse of Project Terra (LUNA), whose South Korean founder Do Kwon may be called before the National Assembly to explain what happened.
A recommended regulation would force coin issuers to provide the FSC with a white paper on their project, detailing the company’s officers, how it plans to use funds raised through an ICO, and the risks associated with the project. Updates to the whitepaper would need to be submitted at least seven days prior to the proposed changes taking effect.
Even foreign-headquartered companies wishing to have their tokens traded on Korean exchanges would have to abide by the white paper rule.
It is likely that the FSC had stablecoins on its agenda well before problems hit Terra USD (UST), Dei (DEI) and Tether (USDT) last week. However, there are recommendations to have asset management requirements for stablecoin issuers related to how they use collateral and how many coins an issuer can mint.
The report also aims to curb the shady trading activities that local exchanges and coin issuers have been accused of for years. It proposed regulations on insider trading, price manipulation, pump-and-dump schemes, wash trading and customary transaction fees.
Cointelegraph reported in April that speaking to local media, an industry insider conceded that the provisions of the Capital Markets Act may not be enough to adequately regulate the crypto industry.
Related: Leaked report: South Korea to set up crypto framework by 2024
South Korea’s new President Yoon Seok-yeol was elected in part due to his eagerness to understand the crypto industry. On May 3, he stated that his regime would push through a law that would extend the tax exemption of crypto investment profits until a proper legal framework is in place.
The report released today could be the start of the framework President Yoon had in mind for the crypto industry.
https://cointelegraph.com/news/south-korean-legislature-considering-new-licensing-system-for-crypto South Korean lawmakers are considering a new licensing system for crypto