An illustrative image of cryptocurrencies / Reuters-Yonhap

Park Jin-woo, partner lawyer at law firm Min / Courtesy of Park Jin-woo

Since the Virtual Asset User Protection Act — the first regulation specifically targeting Korea's crypto industry — took effect July 19, the domestic market has been in a state of flux.

Despite the confusion, Park Jin-woo, a partner lawyer at Korean law firm Min, views the law, which essentially requires quasi-disclosures for crypto projects, as a potential opportunity for the credible ones.

"Although there are many successful and legitimate crypto projects, the information imbalance has led to a situation where most ordinary investors have suffered losses. This led many people to avoid the crypto market due to fear and a lack of understanding. If information were made more accessible and transparent, it could help create a more informed and active market," Park told The Korea Times during the recent interview.

Nineteen virtual asset bills pending in the National Assembly were consolidated and adjusted, resulting in the enactment of a new law on July 18, 2023. Following a one-year preparation period, the law took effect on July 19, 2024, with the goal of user protection and regulation.

Crypto projects are required to disclose information transparently and in accessible ways. Previously, information was shared primarily between exchanges and project foundations for evaluation purposes. Now, the goal is to make this information accessible to users as well.

"For foreign projects, providing Korean language support is essential. They need to disclose information on their website, including how the token supply is issued and distributed, with all the details translated into Korean. Openly sharing details about events like airdrops (crypto projects distributing free coins to raise awareness) is also necessary," Park said.

"Exchanges are required to notify users about the availability of such information, as there are many instances where users miss important information simply because they don't know where to find it."

Since 2019, Park has been providing consulting services for virtual asset projects, while also specializing in crypto fraud cases. He also represented early seed investors in legal actions related to the Terra-Luna case. Currently, he leads the crypto task force team at Min, and acts as an adviser to crypto data intelligence platform Xangle.

According to Park, the biggest impact will be felt when exchanges begin filtering out coins that fail to meet standards every three months, according to the Digital Asset eXchange Alliance's voluntary guidelines. The first review to maintain listings has been granted a six-month grace period to allow sufficient time to reassess numerous listed virtual assets.

However, since the formats and standards for disclosing information haven't been established yet, projects and exchanges are hesitant to move forward. They are uncertain about what changes have taken place and find it confusing to know who to turn to for answers.

This is particularly true for foreign crypto foundations that do not have offices in Korea or employees specializing in the Korean market. They are concerned about the potential risks of making mistakes in the early stages.

"If clear standards are set, even foreign foundations would be eager to comply. They already have the necessary information. All they would need to do is follow the guidelines, translate the documents and get them legally reviewed before submission," Park said.

"It's a relatively simple process with a bit of effort, especially given the Korean market's attractiveness. Yet, for foundations with something to hide, this could prove to be more challenging."

He noted that while consulting firms and law firms in other countries often provide significant support in these areas, such practices are less common in Korea. Currently, several law firms and companies like Xangle are making considerable efforts to fill this gap.

Regarding criticisms that the current law only stipulates regulation, Park emphasized that creating a safe and sound market environment should come first to prevent market manipulation and other abuses. Only then can further discussions be initiated.

"Currently, most Korean users enter the crypto market with a sole focus on generating profits. If you ask an investor about the utility of a token, probably less than half would be able to provide an answer."

The most current example is Avail, which saw its price plummet shortly after its listing on Bithumb, the country's second-largest exchange. An unnamed investor, presumed to be a Korean national, sought to gather Avail tokens from foreign nationals through X, the social media platform formerly known as Twitter, about 40 minutes before its listing. The person allegedly sold the gathered amount to the domestic exchange and made significant profits.

"If clear guidelines are established and the law's objectives are well-defined, instances of crypto misuse are likely to diminish significantly. This could transform general investors into active users of Web 3.0 projects, allowing them to trade and utilize coins as added value. This could lead to more dynamic and robust market activity," Park said.