In a significant move to bolster investor protections in the cryptocurrency sector, the Digital Asset Basic Act is set to take effect in March 2025. This new legislation introduces strict liability for virtual asset service providers (VASPs), marking a pivotal shift in how these entities are held accountable for security breaches. According to the assessment of specialists presented in the publication, this change is expected to enhance trust among investors and promote a more secure trading environment.
No-Fault Liability for VASPs
Under the provisions of the Digital Asset Basic Act, VASPs will face no-fault liability for damages incurred due to hacking incidents or system failures. This means that investors will have a clearer path to seek compensation without the burden of proving negligence on the part of the service providers.
Enhancing Consumer Protection
The legislation aims to enhance consumer protection and reduce legal uncertainties that have historically plagued the cryptocurrency market. By imposing these stringent requirements, the framework is expected to encourage VASPs to adopt more robust security measures, ultimately fostering a safer environment for investors.
Attracting Risk-Averse Investors
As a result, the act is anticipated to attract more risk-averse investors who have been hesitant to engage with the cryptocurrency market due to concerns over security and liability. This could lead to a more stable and trustworthy ecosystem for digital assets.
On December 28, 2023, the Supreme People's Court of China advocated for legal reforms in digital commerce, highlighting the need for a comprehensive legal approach. This initiative contrasts with the upcoming Digital Asset Basic Act aimed at enhancing investor protections in the cryptocurrency sector. For more details, see read more.
