South Korea Unveils New Cryptocurrency Regulations, Enforcing Asset Disclosure


South Korea Unveils New Cryptocurrency Regulations, Enforcing Asset Disclosure

The South Korean government is tightening regulations in the cryptocurrency industry by implementing new asset disclosure rules. On July 11, the Financial Services Commission (FSC) announced a bill that will require all firms involved in issuing or holding cryptocurrencies, such as Bitcoin (BTC), to disclose their holdings.

The FSC, after reviewing various proposals, approved the exposure draft bill, which mandates disclosure requirements for cryptocurrencies. These measures aim to improve transparency in accounting and disclosure of crypto assets, in line with supervision guidelines that demand accounting for each transaction involving digital currencies. The initiative also seeks to revise accounting standards to include the disclosure of virtual asset transactions.

The current draft version of South Korea's crypto accounting supervision guidelines specifies that the reporting of crypto assets should include fungible assets based on distributed ledger technology or similar technology, as well as assets issued using cryptography. The guidelines also encompass security tokens, which are digitized securities regulated under the Capital Markets Act, according to the regulator.

While the new accounting supervision guidelines are effective immediately, the revised disclosure standard will be implemented starting January 1, 2024. The FSC strongly recommends early application of the guidelines.

This development follows recent reports from local industry media, stating that the FSC has mandated its internal employees to disclose their crypto holdings under the Specific Financial Information Act. The requirement applies to employees currently involved in crypto-related duties and those who have performed such duties in the past six months.

Although the latest crypto disclosure rules are relatively new, South Korea has previously required government officials to declare their cryptocurrency holdings. The National Assembly unanimously passed the "Kim Nam-guk Prevention Law," which compels lawmakers and high-ranking public officials to report their crypto assets. This legislation was introduced in response to a scandal involving certain public officials allegedly manipulating the market and engaging in large-scale crypto transactions.

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