"Regulation on Business Entry Needed to Ensure Trustworthiness of Virtual Asset Market"

A claim has been made that entry regulations for relevant operators are necessary to protect users and maintain market reliability in the virtual asset market.

On the 25th, at the 7th Digital Asset Special Committee meeting held at the National Assembly Members' Office Building in Yeouido, Seoul, Park Dae-chul, Chairman of the Policy Committee of the People Power Party, Yoon Chang-hyun, and other attendees are taking a commemorative photo. Photo by Kim Hyun-min kimhyun81@

On the 25th, Kim Gap-rae, Senior Research Fellow at the Korea Capital Market Institute, who attended the 7th Civil-Party-Government Meeting of the People Power Party's Digital Asset Special Committee held at the National Assembly Members' Office Building, explained, "Entry regulations that define and review human, physical, and financial requirements for virtual asset operators are necessary to protect users and maintain market reliability."

Kim also stated, "The level of entry requirements for virtual asset operators should be discussed by considering the pros and cons of each option between a registration system, which has a slightly higher entry regulation level than the current reporting requirements under the Special Financial Transactions Information Act, and a licensing system with a higher level. Since there is a risk of incurring significant losses if operators spend huge amounts to meet human and physical requirements but fail to obtain approval due to the unclear approval status, discussions on introducing a preliminary licensing system are also necessary to prevent such situations."

Regarding the classification and application of virtual assets, he said, "Regulatory authorities should evaluate and classify virtual assets and differentiate registration (approval) requirements by considering the evaluation/classification and types of business activities. Since virtual asset businesses are likely to take various business model forms in the future, it is preferable to exemplify types of virtual asset operators such as virtual asset traders, virtual asset custody managers, and virtual asset wallet service providers rather than legally defining operator types."

Kim explained that discussions are also needed on whether to include the governance structure of virtual asset operators in entry requirements, as well as on the scope of work and sanction regulations. He also saw the need for discussions on listing and operation regulations, whether to allow damage compensation contracts in lieu of segregated deposits of virtual assets, and sanction regulations.

He added, "In the future, the National Assembly and regulatory authorities need to comprehensively consider the similarities and peculiarities of virtual asset operators and financial investment businesses to establish the basic direction of virtual asset operator regulations for the second phase of legislation."

At the meeting, there was also a claim that the virtual asset market must first be made a safe place. Professor Lee Jong-seop of Seoul National University’s Business Administration Department said, "Information protection and security are the starting points for achieving an efficient market," adding, "The concept of an efficient market broadly encompasses both price efficiency and protection of individual investors."

Professor Lee emphasized that the customer identification (KYC) system currently implemented by domestic centralized exchanges should be cooperatively extended to apply not only domestically but also to overseas markets.

Additionally, Professor Jeon In-tae of the Catholic University Mathematics Department stressed the necessity of an evaluation system and disclosure system. He said, "For the sound development of the digital asset industry and consumer protection, accurate and fair evaluation of related projects is paramount, and the establishment and operational importance of evaluation agencies performing this task should be recognized and reflected in legislation. Evaluation agencies should consist of at least three independent institutions to prevent market domination by one or two monopolistic entities or collusion with exchanges."

He continued, "Introducing a mandatory disclosure system to systematize the scope and process of issuers' disclosures and building an integrated system that consolidates disclosures from multiple exchanges are necessary. This will help resolve information asymmetry within the digital asset market, secure market fairness, and protect investors."

Lee Jae-won, CEO of Bithumb, presented the current status and plans of the Digital Asset Exchange Joint Council (DAXA) self-regulation, including conducting annual anti-money laundering risk assessments, mandatory participation of external experts in new transaction support reviews, plans to develop common suspicious transaction report (STR) types for the digital asset industry, and preparation of virtual asset service provider (VASP) risk assessment guidelines.

On the 25th, at the 7th Digital Asset Special Committee meeting held at the National Assembly Members' Office Building in Yeouido, Seoul, Park Dae-chul, the Policy Committee Chairman of the People Power Party, and Yoon Chang-hyun, the committee chairman, are having a conversation. Photo by Kim Hyun-min kimhyun81@

At the meeting, Park Dae-chul, Policy Committee Chair of the People Power Party, criticized Kim Nam-guk, an independent lawmaker who left the Democratic Party amid allegations of holding and investing in virtual assets, saying, "There is sky-high anger and betrayal among young people because he wielded power to change the system while trading coins."

Park emphasized, "Although the digital (virtual asset) market has shrunk due to the Kim Nam-guk incident, we must create a fair and safe investment environment for 7.5 million 'coin ants' and further drive the development of the blockchain industry."

This content was produced with the assistance of AI translation services.