South Korea is taking further steps to regulate the cryptocurrency industry by introducing new asset disclosure rules. The country’s Financial Services Commission (FSC) announced a bill that mandates all firms issuing or holding cryptocurrencies, including Bitcoin (BTC), to disclose their holdings. The objective of these measures is to enhance transparency in accounting and disclosure of crypto assets, aligning with supervision guidelines that necessitate recording every transaction involving cryptocurrencies.
The draft version of South Korea’s crypto accounting supervision guidelines defines the scope of crypto assets that need to be reported. It includes fungible assets based on distributed ledger technology or similar technology, as well as those issued using cryptography. Furthermore, security tokens and digitized securities under the Capital Markets Act also fall within the guidelines’ purview.
While the accounting supervision guidelines are immediately effective, the revised disclosure standard will be implemented from January 1, 2024. The FSC encourages early adoption of the rules. These developments follow reports that the FSC required its internal employees, particularly those involved in crypto-related duties, to report their crypto holdings under the Specific Financial Information Act.
It’s worth noting that South Korea has already mandated government officials to declare their cryptocurrency holdings. The National Assembly unanimously approved a bill known as the “Kim Nam-guk Prevention Law,” which requires lawmakers and high-ranking public officials to disclose their crypto assets. This legislation was a response to a scandal involving public officials allegedly manipulating the market and engaging in significant crypto transactions.
This move towards greater transparency and accountability in the cryptocurrency industry reflects South Korea’s commitment to regulating the sector effectively. By ensuring firms disclose their crypto holdings, the authorities aim to minimize the potential for fraudulent activities and market manipulation. These measures also contribute to building trust among investors and fostering a more secure and stable crypto ecosystem.
South Korea’s emphasis on financial transparency and government compliance creates a regulatory environment that fosters responsible cryptocurrency practices. As the country takes proactive steps to regulate the industry, it sets an example for other nations considering similar measures to mitigate risks associated with cryptocurrencies while promoting innovation and growth in the digital asset space.