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The government of South Korea is adding stricter layers of regulations against the cryptocurrency industry. With the latest bill, all firms that either issue or invest in cryptocurrencies will be required to declare their digital holdings.
The South Korean Financial Services Commission (FSC) announced the new bill, which is still currently a draft version, earlier this week. The draft version of the bill will introduce mandatory disclosure requirements for all firms holding digital assets. According to the FSC, this new legislation will be in place to increase transparency in accounting for firms involving crypto transactions, with the financial authority noting:
“The plan to improve the transparency of accounting and disclosure related to virtual assets consists of two main types: [1] supervising guidelines for accounting processing by transaction related to virtual assets, and [2] revising accounting standards that require annotation disclosure on virtual asset transactions.”
This follows a mandate set by the FSC, requiring internal employees to report their cryptocurrency holdings. Under the Specific Financial Information Act, specific individuals working for the FSC are mandated to declare the digital assets they hold. The employees include those within roles pertinent to the cryptocurrency industry and those that have worked within cryptocurrency over the past six months.
Government officials are also required to disclose their cryptocurrency holdings. This requirement came after public officials were reported to be involved in manipulating the market and influencing the cryptocurrency prices in the region.
What assets need to be declared in South Korea?
In the drafted bill, the FSC noted that “crypto” assets that need to be disclosed include any fungible digital assets that operate and are issued through blockchain or distributed ledger technology. This means any assets that are created using cryptography, which includes Bitcoin ($BTC), Ether ($ETH), and security tokens. The new accounting guidelines will be implemented immediately and the disclosure bill will be put in place from the beginning of 2024.