<p>The South Korean Financial Services Commission (FSC) has taken a step towards the development of a virtual asset regulation system by seeking external parties to undertake a research project in this area, according to local news agency <a href="https://www.news1.kr/articles/5116454" rel="noopener noreferrer nofollow">News1</a>.</p><h2 id="header-0">Second phase</h2><p>Earlier this month, the National Assembly <a href="https://medium.com/&#64;coinness.gl/koreas-virtual-asset-user-protection-act-to-take-effect-in-july-next-year-d3df61766cd6" rel="noopener noreferrer nofollow">passed</a> the Virtual Asset User Protection Bill, aimed at protecting investors and preventing unfair trading practices. This legislative accomplishment, scheduled to go effective in July next year, is referred to as the “first phase” of virtual asset regulations. Building upon this foundation, the FSC has now shifted its focus to the “second phase,” which involves the regulation of virtual asset service providers (VASPs).</p><h2 id="header-1">Regulating VASP operations</h2><p>One primary concern regarding VASPs is the potential for conflicts of interest arising from their involvement in the issuance and distribution of virtual assets. In response, the FSC is determined to design a regulatory framework that covers a wide range of virtual assets, including stablecoins, security tokens, and utility tokens.</p><p>In addition to this, the FSC intends to establish a system that governs advisory and disclosure businesses, which will play a crucial role in disseminating information about asset prices and disclosures.</p><p>Moreover, the regulatory system will include guidelines for holding parties accountable in case of incidents and for overseeing the operations of VASPs to maintain a safe and fair market environment.</p><p>The FSC acknowledges the significance of aligning policies with international standards. To achieve this, the commission will conduct an examination of virtual asset regulatory approaches taken by different countries and international organizations. Through this study, the FSC aims to integrate global best practices and approaches into Korea’s own regulatory framework for virtual assets.</p><p>Once the study is complete, the FSC has to report the result to the National Policy Committee of the National Assembly by July 2024 before the Virtual Asset User Protection Bill goes into effect.</p>

Korea’s FSC Embarks on Developing Regulatory Framework for VASPs

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