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2024-05-17
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[DR & AJU Issue Report] Overview of Virtual Asset Users Protection Legislation: Key Details and Issues


1. Legislation and Enforcement of the Act on the Protection of Virtual Asset Users

The Act on the Protection of Virtual Asset Users (hereinafter referred to as the “Act”), which aims to protect virtual asset users and establish market order in the virtual asset industry, will take effect from July 19, 2024.
In particular, the Act stipulates ① the protection of virtual asset users' assets, ② the prohibition of unfair trading practices in the virtual asset market, and ③ financial authorities’ authority to supervise and sanction virtual asset markets and business operators.

 

2. Key Details of the Act

The Act does not apply to items such as game money, electronic money, CBDCs, NFTs, etc. 
NFTs are excluded from application due to their specificity and non-substitutability. However, the supervisory authority considers partial NFTs as virtual assets if they are issued in bulk and traded in a substitutional manner or are usable as a means of payment for specific goods or services.

 

3. Issues and Implications of the Act on the Protection of Virtual Asset Users

Regarding the use of undisclosed material information, the legislation specifies the standard timing for disclosing information, taking into account the specificity of the virtual asset market. However, given the absence of a unified disclosure platform in the virtual asset market, controversies surrounding the information publicity are likely to persist. 
In response to the Financial Services Commission’s concern about market-making activities in the virtual asset market potentially amounting to market manipulation, there are voices emphasizing the vital role of market makers within the virtual asset market and proposing a restrictive interpretation of market-making practices. This has sparked keen attention to future legal interpretations on this matter.

To respond to the rapidly evolving legal market, DR & AJU LLC has been publishing issue reports that analyze the latest news and trends in the legal landscape.
Please click the link below to access the report.

https://www.draju.com/ko/sub/newsletters.html?type=view&bsNo=4063&page=2&bcCat=16