South Korea Plans to Establish Crypto Regulatory Policies to Prevent Another Terra-like Crash

A week after South Korea’s Financial Services Commission (FSC) called for a global alliance to work together to scrutinize cryptocurrencies, the country said it plans to set up regulatory policies for local crypto exchanges.

South Korean Crypto Regulatory Plans 

According to a local news report, South Korean authorities are planning to regulate crypto trading platforms in a bid to properly scrutinize digital assets and improve consumer protection.  The move is part of the country’s plan to stop the recurrence of the Terra-LUNA fiasco that wiped out billions of dollars off the crypto market with most of the funds belonging to Korean Investors. 

In a closed meeting held to discuss the best defensive measures against the crash of TerraUSD (UST) and LUNA, the South Korean government has decided to tighten securities around exchanges providing crypto asset services within the country. 

“We need to make exchanges play their proper role, and towards that end, it is crucial for watchdogs to supervise them thoroughly. When exchanges violate rules, they should be held legally responsible to ensure that the market functions well without any trouble,” Rep. Sung Il-jong said at the meeting. 

Terra (LUNA), which ranked among the top 10 cryptocurrencies in the world, collapsed with about 280,000 Korean investors’ funds and authorities are trying to prevent that from happening again. 

As part of efforts to improve consumer protection, South Korea’s decision is aimed at enacting policies to ensure that users interact with the asset class without losing their funds. 

Speaking at the meeting, Kim So-young, the Vice Chairman of the Financial Services Commission, hinted that the agency is going to work together with the Ministry of Justice, prosecution, and police to strictly observe suspicious activities in the crypto industry. 

Crypto Regulatory Concerns

Meanwhile, South Korea’s move to scrutinize crypto asset providers to protect investors came at a time when global financial asset regulators are clamoring to properly regulate cryptocurrencies to protect investors’ interests and prevent the recurrence of the Terra blockchain saga. 

Last month, Ashley Alder, chairman chair of the board of directors of the International Organization of Securities Commissions (IOSCO), stated during a conference that cryptocurrency is one of the three issues global regulators are concerned about.