Criminals in South Korea who profit over 5 billion Korean won (US$3.76 million) from crypto-related illicit activities will face a maximum penalty of life in prison, according to the nation’s Financial Services Commission (FSC).
In a notice of legislation posted Wednesday, the FSC said it would be proceeding with the preparations for the Virtual Asset User Protection Act, a new law that was enacted last July.
The East Asian nation’s new consumer protection rule is set to take effect from July 19.
Under the new rules, the use of important undisclosed information related to virtual assets, market manipulation, and fraudulent trading practices are prohibited, and violations are subject to criminal penalties or fines. In the case of criminal penalties, either imprisonment for at least one year or a fine equivalent to three to five times the amount of the unfair profits may be imposed.
This legislative push by South Korea signifies a global trend toward tightening regulations on the cryptocurrency industry, reflecting growing concerns over the potential for digital assets to be used in illegal activities.
Last month, the United Nations alleged in a report that Tether’s USDT, the world’s largest stablecoin, is growing in popularity in the underground banking and money laundering infrastructure in East and Southeast Asia.
As of 2020, South Korea had one of the most active cryptocurrency economies in the world, ranking 7th worldwide on the Global Crypto Adoption Index compiled by blockchain data platform Chainalysis.
However, the country fell to 23 on the index in 2022, the same year as the US$40 billion collapse of the Terra-Luna cryptocurrency and stablecoin that was launched in the country and caused massive losses to hundreds of thousands of investors. Regardless, local exchanges Upbit and Bithumb are among the world’s 20 largest by trading volume, according to CoinMarketCap data.