South Korea’s new crypto bill is expected to impose tighter controls on exchanges

• the DABA has been in the works for a while, but a leaked report sheds light on upcoming regulations.
• The new South Korean president has also promised to quickly regulate the crypto industry.
• The DABA is expected to come into force by 2024.

The government of South Korea may seek to implement a new licensing framework that requires crypto exchanges to protect investors. A new report from the Financial Services Commission (FSC), which regulates the country’s financial markets, suggests that the government will introduce a law called Digital Assets Basic Law (DABA) next year, which will be implemented by 2024. The law will seek to integrate virtual assets into the country’s institutional system.

The report was leaked and reported by Korean media earlier this week and seeks to provide rules that help tackle issues such as pump and dump systems, washing trades and even insider trading.

Pump-and-dump-and-wash exchange systems inflate the price of a crypto or non-fungible token (NFT) by illicit means. In the wash trade, the seller is on both sides of the trades and inflates the price by buying and selling to himself. On the other hand, pump and dump systems spread false information to inflate the price.

Admittedly, the DABA has been in the works for some time now and was formed by the FSC earlier this year.

What does this imply?

According to the FSC report, the new regulations will be stricter on exchanges and punish them for not respecting the rules of the country Capital Markets Law, which regulates securities. The DABA will also issue various licenses to encryption service providers, depending on the type of service they provide.



In this, crypto trading service providers will be required to provide the highest level of protection to users. South Korea has been dealing with the protection aspect of the industry for some time. The country also launched an “emergency investigation” into its domestic exchanges following the Luna cryptocurrency crash this month.

In addition, the DABA will also require companies and users issuing cryptocurrencies to submit white papers to the FSC before a project goes live. It is unclear whether the same will also apply to NFTs, but the information provided to the FSC will need to include information about the company’s executives, how the funds are obtained and the risks associated with the project. This rule will also apply to companies outside of South Korea, which place tokens on exchanges in the country.

Regulating Crypto

South Korea is one of a handful of countries that have moved rapidly when it comes to crypto regulations in the world. The country’s new president, Yoon Seok-yeol, who was elected earlier this month, has been a strong advocate for industry regulation.

While it’s unclear whether DABA is the law in question, shortly before he took office on May 3, Yoon said he would push his administration to pass legislation to regulate cryptocurrencies and put establish a legal framework. Yoon had also said he would defer tax regimes on cryptocurrencies until the DABA is clarified.

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