South Korean companies operating in the cryptocurrency space will be required to disclose comprehensive information about their transactions to the country’s financial regulator starting from January 2024. This new requirement, announced by the Financial Services Commission (FSC) of South Korea, aims to enhance accounting transparency for digital asset transactions. The government’s objective is to protect investors and improve transparency in the crypto market, following the passage of the Virtual Assets Act in parliament on June 30. These new regulations will require companies to disclose details about the quantity and characteristics of their crypto tokens, as well as their business models and internal accounting policies.
The introduction of these new accounting rules aligns with recent legislation passed in South Korea to safeguard crypto investors. In fact, the country has a significant presence in the crypto industry, with a large number of crypto users. As of the end of 2022, the Korean won was the third most used currency in Bitcoin transactions, following the U.S. dollar and the Japanese yen. By implementing these regulations, the government aims to improve transparency in the crypto market and provide investors with greater visibility and protection.
To ensure the effectiveness of these new rules, the Korean Accounting Standards Board reviewed and approved the draft regulations on July 7. This signifies the government’s commitment to ensuring proper implementation and enforcement of the accounting laws. Authorities believe that the disclosure of comprehensive transaction information will help protect investors and enhance transparency in the crypto market.
Regulatory Oversight and Penalties
The recently passed legislation in South Korea consists of 19 crypto-related bills that grant the FSC and the central bank regulatory authority over crypto companies. These regulatory bodies now have the power to oversee and penalize non-compliant firms. The introduction of these new accounting rules further empowers the authorities to monitor and regulate the crypto industry. Any violations of the laws can result in penalties for crypto companies.
In response to recent controversies, where a Member of Parliament was accused of selling his tokens before the implementation of new crypto-related regulations, the South Korean financial regulator has taken steps to enforce transparency among its employees. The FSC has updated its Code of Conduct for employees and prohibited staff involved with “virtual assets” from investing in digital assets using undisclosed information obtained during their duties. Any employee who owns crypto is now required to report it to the Financial Services Commission. This move aligns with a similar law implemented in Ukraine, where sitting Members of Parliament are required to declare their crypto assets.
The South Korean government is making significant efforts to improve transparency and protect investors in the crypto market. By implementing new accounting rules and requiring companies to disclose comprehensive transaction information, the government aims to provide investors with greater visibility into the crypto industry. These regulations align with recent legislation aimed at safeguarding crypto investors and granting regulatory authorities the power to oversee and penalize non-compliant firms. The introduction of these rules signifies South Korea’s commitment to promote a secure and transparent environment for cryptocurrency transactions. With these measures in place, investors can have more confidence in engaging with the crypto market.