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The Virtual Asset User Protection Act aims to protect investors and regulate the crypto market
South Korea’s Virtual Asset User Protection Act (VAUPA), this came into force to ensure that financial institutions, including exchanges had to keep users’ funds separate from their own. Signed on the 18th of July 2023, the law was expected to give the financial institutions one year to come into compliance with provisions of the said law.
Its core purpose is in safeguarding the users’ funds, barring frustrating business practices, and providing the financial authorities with the powers of supervision and oversight of institutions that deal with virtual assets. Another essential element is the fact that customer deposits’ should be safeguarded by banks, and other charges including fees also. Also, it is important that any questionable trends should be reported without delay.
According to the FSC of South Korea, which is responsible for the enforcement of the Act, the objective of the law is to provide just better protection to the users of virtual assets. As for the anti-competitive practices, the FSC explained that the law remedies unfair trading to impose severe penalties for practicing unfair trades to enhance the fairness of the trading market. But the FSC clarified that the law does not protect users’ assets one hundred percent and encouraged the investors to carefully manage their money.
South Korea's cryptocurrency market is vibrant, with a large community of active investors. The country's exchanges are also popular among international traders who seek to capitalize on the "Kimchi Premium," where cryptocurrency prices can be slightly higher than in other regions.
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