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FSC Introduces Vetting for Crypto Company Executives in South Korea

South Korea's FSC revises the VASP system to enhance executive vetting and transparency in crypto industry regulations.
FSC Introduces Vetting for Crypto Company Executives in South Korea

Highlights

  • FSC mandates FIU approval for VASP executive changes, enhancing crypto governance in South Korea.
  • New FSC rules introduce a review suspension system, adding clarity to VASP regulatory processes.
  • VASPs must now prove operational capabilities, ensuring a safer South Korean crypto market.

The Financial Services Commission (FSC) of South Korea has unveiled a revised reporting system for virtual asset service providers (VASPs). This action aims to strengthen the regulatory framework for recruiting executives and representatives in the crypto industry.

The new regulations require a stringent recruitment process by the authorities before the official appointment of new executives, thereby filling the loopholes in the current system that enabled unqualified people to take up essential positions without due diligence.

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FSC’s Stricter Oversight on Executive Appointments

At the center of this regulatory change is the provision for all VASPs to secure approval from the Financial Intelligence Unit (FIU) before any alteration to the executive or representative officer of any VASP organization can be effected. 

This is aimed at ensuring that situations witnessed where companies such as the Gopax exchange would have frequent leadership changes without proper regulatory scrutiny would not recur. Consequently, the FSC’s determination is to implement this rule to ensure that only individuals who meet high qualification standards can guide these economic institutions.

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Enhanced Transparency in the Review Process

Moreover, the amendment provides a new reporting review suspension mechanism. This system allows the FIU to suspend the review of a VASP’s reporting in the case of ongoing criminal investigations or litigations that could influence the outcome of the review. 

The decision to resume the review will be re-evaluated every six months, thereby adding clarity and predictability to the process that was previously lacking.

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Rigorous Criteria for Financial Operations

The revised regulations extend beyond executive appointments. VASPs seeking to offer real-name account services must now demonstrate their capability by ensuring adequate staffing and infrastructure. 

This stipulation underscores the FSC’s commitment to upholding high standards of operation within the sector, safeguarding against the risks associated with inadequate resources or compliance failures.

Implications for the Industry

The FSC’s decisive action reflects a broader commitment to fortifying the integrity and stability of South Korea’s burgeoning cryptocurrency market. By instituting these rigorous checks, the FSC not only aims to protect investors but also to foster a more transparent, accountable, and resilient digital asset ecosystem.

As the industry continues to evolve, the FSC has pledged to maintain open communication channels with VASPs, offering guidance through updates on the FIU website and informational sessions. This collaborative approach between regulators and industry participants is crucial for navigating the complex landscape of virtual asset regulation.

Read Also: Ripple Vs SEC: Can Ex-SEC Chair Jay Clayton Talk About XRP Lawsuit Now?

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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