South Korean regulator proposes strict new rules for token issuers

South Korea’s Financial Services Commission (FSC) has issued a report outlining its new definition of cryptocurrencies, together with proposed procedures for token issuers and punishments for non-compliance.

The mooted rules might impose onerous rules on people or platforms that mint non-art NFT’s supposed for buying and selling, in addition to decentralized finance initiatives amongst others.

The Nov. 23 report by the FSC particulars gadgets it proposed within the Act on the Protection of Cryptocurrency Users that has been despatched to the National Assembly for consideration.

It lays down rules for token issuers who want to have their tokens traded on Korean exchanges and advised punishments for these the FSC has deemed to be making “undue profit through market manipulation or trading on undisclosed information.”

The report first addresses token-issuing companies, which embody ICO operators, Decentralized Autonomous Organizations (DAO), and nonfungible token (NFT) minting providers (and doubtlessly others.)

The FSC would require these entities to submit a white paper, receive a good ranking from a acknowledged token analysis service, receive a authorized evaluate of the undertaking, and disclose common enterprise experiences to customers.

Previously, the FSC had not acknowledged NFTs as belongings to be regulated, however that decision changed earlier this week. It additionally considers privateness tokens, reminiscent of Monero (XMR), and stablecoins reminiscent of Tether (USDT) to be cryptocurrencies, whereas central financial institution digital currencies (CBDC) aren’t.

Related: Mixed messages on crypto tax rules create confusion in South Korea

Failure to adjust to the rules would carry the penalty of no less than 5 years in jail plus three to 5 instances the quantity of “unfair profit” made. Unfair revenue could be thought-about any revenue made whereas the companies had been in non-compliance with the regulation. These punishments echo these from the prevailing Capital Market Act.

The new proposals are in response to what the FSC has evaluated to be deficiencies within the means of the Special Reporting Act to totally defend buyers. The Act is the laws that led to the closure of most of the country’s crypto exchanges because of strict necessities to stay in operation.

A properly linked alternate business insider advised Cointelegraph the proposals had been optimistic:

“The new law, once passed, will further promote industry development and help protect digital asset investors.”

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