A South Korean lawmaker has proposed amending the country's Electronic Financial Transaction Act to more closely regulate cryptocurrencies.

According to several South Korean media outlets, including the Financial News and Seoul Economic Daily, the proposal was put forth this week by Park Yong-Jin, a representative from the Democratic Party who has been at the center of recent regulatory deliberations.

The amendments would seek to define digital currency businesses and classify different parties as digital currency traders, brokers, issuers and managers.

It further mandates businesses hold deposits or provide insurance to hedge against potential cybercrime incidents, and aims to apply a 500 million South Korean won ($450,000) capital reserve threshold for any business that operates cryptocurrency trading service prior to seeking an approval from the authority.

Provisions for preventing market manipulation and money laundering using digital currencies are also included in the changes.

Park is seeking a more regulated environment amid recent surging prices of major cryptocurrencies like bitcoin and ethereum. The proposal follows a recent panel hosted by the politician at a public hearing to argue for regulations covering digital currency.

As for a next step, the bill is expected to be presented to the regular session of the National Assembly in September, at which point, it needs the approval of the country's Financial Services Commission.

As reported by CoinDesk, the financial regulator convened its first initiative last November to launch a regulatory policy on cryptocurrency. However, as of today, its policy plans still remain unclear.

Seoul, South Korea image via Shutterstock