The South Korean government is implementing new regulations to tighten control over the cryptocurrency industry. The latest development is the introduction of asset disclosure rules that will require firms issuing or holding cryptocurrencies like Bitcoin (BTC) to disclose their holdings.
This announcement was made by the Financial Services Commission (FSC) of South Korea on July 11. The FSC reviewed various proposals and approved the exposure draft bill for mandatory disclosure requirements in the crypto sector. The primary objective of these measures is to enhance transparency in accounting and disclosure of crypto assets, aligning with supervision guidelines that demand accounting for each crypto transaction. Furthermore, the initiative also aims to revise accounting standards to include the disclosure of virtual asset transactions.
According to the draft version of South Korea’s crypto accounting supervision guidelines, the FSC has specified that the scope of crypto assets to be reported includes fungible assets based on distributed ledger technology or similar technology, as well as those issued using cryptography. Security tokens, which are digitized securities under the Capital Markets Act, are also included in the guidelines’ scope.
While the accounting supervision guidelines will be effective immediately, the revised disclosure standard will be implemented on January 1, 2024. However, the FSC strongly recommends early application of the standards.
This recent development follows news that the FSC has required its internal employees to report their crypto holdings as defined under the Specific Financial Information Act. This requirement applies to employees currently engaged in crypto-related duties or those who have performed such duties within the past six months.
It is worth noting that the South Korean government has already mandated government officials to declare their crypto assets. The National Assembly of South Korea unanimously passed the “Kim Nam-guk Prevention Law,” which obliges lawmakers and high-ranking public officials to report their crypto holdings. This law was enacted as a response to a scandal involving some public officials allegedly manipulating the market and conducting large-scale crypto transactions.
The new asset disclosure rules serve as yet another step taken by South Korea to strengthen regulations around cryptocurrencies. By ensuring transparency and accountability, the government aims to mitigate potential risks and protect investors in the crypto industry. These measures reflect South Korea’s commitment to promoting a secure and regulated crypto market.