South Korea’s Financial Services Commission (FSC) has taken a step further in regulating the cryptocurrency industry by introducing new asset disclosure rules. The FSC announced on July 11 that all local firms issuing or holding cryptocurrencies, including Bitcoin, will be required to disclose their holdings.
Enhancing Transparency Through Mandatory Disclosure of Crypto Assets
With the aim of improving transparency in accounting and disclosure of crypto assets, the FSC approved the exposure draft bill, which establishes mandatory disclosure requirements for cryptocurrencies. The introduction of these measures aligns with the supervision guidelines that mandate accounting for every crypto transaction and revises accounting standards to ensure disclosure of virtual asset transactions.
Scope of Application and Timeline for Implementation
In the current draft version of South Korea’s crypto accounting supervision guidelines. The FSC specified that the reporting of crypto assets encompasses fungible assets based on distributed ledger technology or similar technologies. It also includes security tokens and digitized securities under the Capital Markets Act.
The accounting supervision guidelines take effect immediately, but the implementation of the revised disclosure standard will occur from January 1, 2024. The FSC encourages the early application of these standards.
Crypto Holdings Reporting Extends to Internal Employees
Prior to the new regulations, the FSC had already required government officials to report their crypto holdings. Now, the scope of reporting has expanded to include internal employees. As part of the Specific Financial Information Act, employees who are currently involved in crypto-related duties. It has been in the past six months are obligated to disclose their holdings.
Preventing Market Manipulation and Ensuring Accountability
The introduction of these crypto disclosure rules often referred to as the “Kim Nam-guk Prevention Law,” stems from a scandal involving public officials accused of manipulating the market and conducting large-scale crypto transactions. By imposing stricter regulations, South Korea aims to prevent such misconduct. Also, ensure the accountability of its government officials.
In conclusion, South Korea’s new asset disclosure rules mark a significant step in regulating the cryptocurrency industry. By enhancing transparency, improving accounting standards, and expanding the scope of reporting. The government aims to foster a more accountable and trustworthy crypto ecosystem. These measures will come into effect in 2024, with early adoption strongly recommended.
