South Korea passed a new cryptocurrency bill called the Virtual Asset User Protection Act, which aims to regulate unfair trading practices and protect cryptoinvestors.

The law consolidates 19 laws related to cryptocurrencies, creating a single bill that defines digital assets and imposes fines for illegal trading practices such as the use of undisclosed information, market manipulation and other unfair trading practices in the cryptocurrency industry.

The Capital Markets Act applies for the first time to virtual assets that have the nature of securities under the new rules. The law also attempts to provide a basis for fines and liability for losses caused by unfair cryptocurrency trading.

In South Korea, virtual asset service providers (VASPs) are now required to be responsible for customer deposits and offer insurance to protect investors from risks such as hacking and computer crashes. Violations of the new rules could result in a minimum of one year in prison or a hefty fine.

The Financial Services Commission has the power to levy a fine of double the amount for gains derived from unfair trading. The news comes after Do Kwon, the founder of Terraform Labs who was behind the Terra ecosystem explosion last year, was sentenced to four months in prison by a Montenegrin court after he was found guilty of using a fake passport.