Representative Min Byung-deok Proposes 'Virtual Asset Exchange Bankruptcy Isolation Act'

Min Byung-deok, a member of the Democratic Party of Korea, announced on the 16th that he has proposed the 'Virtual Asset Exchange Bankruptcy Isolation Act' to effectively protect user assets in the event of a cryptocurrency exchange bankruptcy.

This amendment is a supplementary legislation to the current 'Act on the Protection of Virtual Asset Users', aimed at enhancing the effectiveness of the provision that mandates exchanges to segregate customer assets from company assets. Representative Min explained, "The bill clarifies the legal basis to ensure that virtual asset users' assets are not incorporated into the general bankruptcy estate and allows for asset recovery even in the event of an exchange bankruptcy."

In fact, in 2019, the Seoul Bankruptcy Court judged the claim for the return of virtual assets by users in a cryptocurrency exchange bankruptcy case as a general claim rather than a right of recovery. As a result, users of the exchange faced difficulties in practically recovering their assets.

Representative Min stated, "As part of efforts to protect and foster the virtual asset users, investors, and the exchange-related industry, I have proposed this bill," and promised to "promptly proceed with the enactment of the Basic Act on Virtual Assets (Digital Asset Basic Act)."