After the collapse of Terra LUNA and the bankruptcy of FTX, South Korean authorities are proposing new amendments to the Digital Assets Bill that will allow greater control over the exchange of cryptocurrencies strive.
Congressman Yoon Chang-Hyun is preparing an amendment to expand the control of financial authorities to prevent the recurrence of events like the FTX collapse.
According to local media outlet News 1, Chang-Hyun is proposing giving more powers to the country’s Financial Services Commission and Financial Regulatory Service “instead of self-regulating” cryptocurrency exchanges.
“Rep. Yoon Chang-Hyun of the People Power Party plans to propose a revision of the law on secure digital asset transactions at the first Legislative Review Subcommittee of the National Assembly Political Committee, which is being held on the same day.”
South Korea looks to protect investors from another FTX-like crash
The new amendment to the Digital Assets Act calls for the mandatory separation of customer deposits. It also gives tax authorities better control against unfair trading practices.
This means regulators can monitor and inspect cryptocurrency projects and exchanges to protect investors from millions in losses like those caused by Terra LUNA.
It’s worth noting that South Korean prosecutors, along with Interpol, have issued an arrest warrant to arrest Do Kwon, the founder of Terra, who is still on the run – although he denies it – after being arrested over the collapse of the USTstablecoin was accused of fraud.
This is not an isolated effort. Other regulators around the world have called for tougher laws, with Terra and FTX serving as examples. The United States is leading this effort and is holding hearings to better understand the situation.
Exchanges will not be able to use their clients’ funds
Another major change in the Digital Assets Law is that cryptocurrency trading platforms will not be able to arbitrarily confiscate their users’ deposits once they have been sent to a custodian, as was the case with FTX and Alameda Research.
In addition, the new law removes the “self-regulatory” power of cryptocurrency exchanges to take “appropriate action” in the event of erratic fluctuations in price or trading volume, handing over control of such activities to the financial authorities.
Exchanges are now required to immediately report any unfair activity to the Financial Oversight Service Governor, who is responsible for taking appropriate measures to prevent fraud, money laundering or other criminal activities.
According to an unidentified National Assembly official, the amendment to the law “was introduced to reflect on the FTX incident and prevent it from happening again.”
Source: Crypto News Deutsch