A committee at South Korea's National Assembly has approved the Virtual Asset Act, aimed at protecting crypto investors, a year after the collapse of the Terra-Luna ecosystem in May 2022.

The act, passed on April 25, defined the umbrella term "virtual assets" to include cryptocurrency, digital assets, and tokens. It also defined virtual assets as digital tokens that have economic value and can be electronically traded and transferred. The definition excluded central bank digital currency (CBDC) as it is legal tender, while most cryptocurrencies are not.

The act was introduced as a measure against possible market confusion in the future when cryptocurrencies become a more viable payment method. It also included regulatory details such as countermeasures against illegal and unfair trading, as well as the scope of supervision granted to authorities.

The misuse of undisclosed information, price manipulation, and unfair trading behaviors were classified as "unfair trading acts" that could lead to criminal punishment and accountability for investors' losses.

Furthermore, the act requires cryptocurrency business operators to create and keep all crypto transaction records. Insurance against possible cyberattacks or network failure will also be mandatory.

This act, the country's first step focusing on investor protection, is in line with global trends. Recently, the European Union passed the Market in Crypto Act (MiCA) to heighten vigilance against crypto fraud.