Nikolas Sargeant
South Korean lawmaker Kim Hyun-jung has proposed an amendment to the Virtual Asset User Protection Act in an effort to strengthen protections for users of digital assets. The proposed changes focus on increasing transparency and accountability within the rapidly growing virtual asset market. If passed, the amendment would require virtual asset service providers (VASPs) to immediately report incidents that could disrupt their services, such as hacking or system failures.
The proposal also mandates that VASPs update their websites with real-time information during security breaches or service disruptions, ensuring customers remain informed and can trust the platform. This move comes as financial institutions in South Korea increasingly enter the digital asset space, driving demand for greater regulatory oversight.
Legislative Process and Expected Timeline
The proposed amendment is currently under review by South Korea’s Ministry of Economy and Finance, led by Choi Sang-mok. If the proposal receives legislative approval, it could take effect in 2025. As the virtual asset market expands, the country is also grappling with growing concerns over suspicious transactions, with the Financial Intelligence Unit (FIU) reporting a 48.8% rise in such activities in the past year. This has led to discussions about expanding the definitions for virtual assets and their merchants before the law is fully implemented.
