The Terra (LUNA) crisis has left the crypto space shocked to the spine. The debacle also received responses from different authorities, sectors, and nations across the globe. Some of those that have reacted to the recent activities of LUNA are government authorities.
The South Korean authorities have become more interested in improving the regulation of cryptocurrencies in the country, as a result of the issues linked to LUNA. They have launched an emergency study into the activities of cryptocurrencies following the activities of Terra.
Reports have it that the financial regulators in the country have started assessing the effects of digital assets, especially on the economy. The aim of this is to create a proposed "Digital Asset Basic Act" that will regulate cryptocurrencies and other digital assets available in the country.
The proposed Act is expected to be made public in 2024 but passed into law by 2023, though concrete details concerning what the law will contain have not been made officially available to the public. It is believed that the Act will include regulations to protect the interests of investors and other aspects of the country.
As a result of the LUNA incident, the two government organizations that are in charge of cryptocurrencies and other digital assets, the Financial Services Commission (FSC) and Financial Supervisory Service (FSS) are expected to implement strategies to educate residents of the country about the risks attached to digital assets.
The existing legislation in South Korea does not empower the authorities to analyze the activities of Terra because the current regulations are only meant to prevent money laundering through digital assets.
In recent times, the coins linked to Terra and managed by them including LUNA and stablecoin, UST have suffered a massive loss. Know more about UST and its founder Do Kwon's last failed project here.
At the moment, details of the proposed regulations have not been made public, and it is unable to tell if it will also focus on crypto exchanges.