The Financial Services Commission (FSC) has announced that the Act on the Protection of Virtual Asset Users, aimed at establishing sound order in the virtual asset market and ensuring protection for users, would take effect from 19 July,2024.

The new law was enacted on 18 July 2023. In the year since then, implementing regulations have been drawn up. The law requires virtual asset businesses to take measures such as purchasing insurance or accumulating reserves in accordance with the guidelines determined by the Financial Services Commission (FSC), to fulfil their liabilities and obligations in the event of incidents such as cyber-attacks or equipment failure. The new law also requires virtual asset service providers to report illegal transactions to the Financial Supervisory Service (FSS).

Insurers’ response

Ahead of the Act taking effect, non-life insurers have been rushing to release products for virtual asset service providers. Samsung Fire & Marine Insurance released the relevant product on 12 July, becoming the first insurer to do so. Beeblock, a minor crypto exchange, became its first policyholder, reported The Korea Times.

KB Insurance followed suit by releasing its product on 17 July and other insurers, including Hyundai Marine & Fire Insurance and NongHyup Property & Casualty Insurance, are also working to release theirs. As there were hitherto no particular virtual asset-related packages in the domestic insurance market, insurers were short on relevant statistics and data, such as accident occurrence probability, which is necessary to develop their product. This led them to work with Korean Re to develop the product and set insurance premium rates.

On 10 and 12 July, the FSS approved policy clauses for virtual asset insurance, submitted jointly by 11 major non-life insurers. All 11 insurers offer equal clauses, since the insurance product is mandatory under the law.