South Korean companies that hold or issue cryptocurrencies will need to provide comprehensive information about their transactions to the financial regulator starting from January 2024. The Financial Services Commission (FSC) of South Korea announced this requirement on Tuesday, stating that domestic firms involved in crypto activities must ensure complete disclosure under the new accounting rules.
The new regulations will require companies to disclose details about the quantity and characteristics of their crypto tokens. Additionally, South Korean firms will be obligated to reveal their business models and internal accounting policies regarding the sale of cryptocurrencies and associated profits. The government aims to enhance accounting transparency for digital asset transactions, following the passage of the Virtual Assets Act in parliament on June 30.
To ensure the effectiveness of these rules, the Korean Accounting Standards Board reviewed and approved the draft regulations on July 7. Authorities believe that the implementation of new accounting laws will protect investors by improving transparency in the crypto market.
South Korea has a significant presence in the crypto industry, with a large number of crypto users. At the end of 2022, the Korean won was the third most used currency in Bitcoin transactions, after the U.S. dollar and the Japanese yen. The introduction of these new accounting rules aligns with legislation passed last month, which aims to safeguard crypto investors. This legislation consists of 19 crypto-related bills that grant the FSC and the central bank of South Korea the authority to oversee crypto companies. Furthermore, authorities have the power to impose penalties on crypto firms found to be in violation of the laws.
In a previous development, the South Korean financial regulator FSC asked its employees to disclose their crypto holdings after a Member of Parliament was accused of selling his tokens before the implementation of new crypto-related regulations. As a response, the financial regulator updated its Code of Conduct for employees, prohibiting staff involved with “virtual assets” from investing in digital assets using undisclosed information obtained during their duties. The updated code mandates that any employee who owns crypto must report it to the Financial Services Commission.
South Korea is not the first country to introduce legislation requiring public officials to disclose their crypto holdings. Ukraine previously implemented a similar law, which requires sitting Members of Parliament to declare their crypto assets.
The South Korean government is taking measures to improve transparency in the crypto market by implementing new accounting rules. By disclosing detailed information about their crypto holdings, companies will provide investors with greater visibility and protection. These regulations align with recent legislation aimed at safeguarding crypto investors and granting regulatory authorities the power to oversee and penalize non-compliant firms.