South Korea Implements Crypto Holdings Disclosure Requirements Starting in 2024

In a continued effort to tighten regulations in the cryptocurrency industry, the South Korean government has announced new rules regarding the disclosure of crypto assets.

On July 11, the Financial Services Commission (FSC) of South Korea revealed a bill that will mandate all companies involved in issuing or holding cryptocurrencies, including Bitcoin, to disclose their holdings.

According to the FSC, after reviewing relevant proposals, they have approved an exposure draft bill that establishes compulsory disclosure requirements for crypto assets.

The purpose of these new measures is to enhance transparency in accounting and disclosure practices related to crypto assets, aligning with supervision guidelines that necessitate accounting for every transaction involving cryptocurrencies. The initiative also seeks to revise accounting standards, mandating the disclosure of virtual asset transactions.

The current draft version of South Korea’s crypto accounting supervision guidelines specifies that the reporting scope for crypto assets includes fungible assets based on distributed ledger technology or similar technologies, as well as those issued using cryptography. The guidelines also encompass security tokens, which are digitized securities governed by the Capital Markets Act.

While the accounting supervision guidelines take effect immediately, the revised disclosure standard will be implemented starting from January 1, 2024. The FSC strongly recommends early adoption of these requirements.

This announcement comes shortly after reports surfaced that the FSC has instructed its employees, in accordance with the Specific Financial Information Act, to disclose their personal crypto holdings. This requirement applies to employees currently involved in crypto-related duties as well as those who have performed such duties within the past six months.

Although the introduction of these latest crypto disclosure rules is relatively recent, South Korea has already mandated that government officials declare their crypto holdings. The National Assembly unanimously passed a bill, known as the “Kim Nam-guk Prevention Law,” which mandates lawmakers and high-ranking public officials to report their crypto assets. This law was introduced in response to a scandal involving certain public officials who were allegedly involved in market manipulation and large-scale movements of cryptocurrencies.

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