Just-In: South Korea Introduces New Crypto Regulations; Will It Impact Exchanges?

The Financial Services Commission (FSC), South Korea’s top financial watchdog, has made it mandatory for crypto businesses that issue or own cryptocurrencies to include specific crypto disclosures in their financial statements starting in 2024 to increase market transparency.

Under the new legislation, crypto businesses will be compelled to post details about the quantity, properties, operational strategies, and accounting practices of the sale of virtual currencies, as well as earnings, volume, and market value of their cryptocurrency.

What Does This Mean for Crypto ?

Following the passage of the Virtual Asset User Protection Act on June 30, the FSC announced its decision on the proposed rules, stating that the goals of the measures are to increase accounting transparency.

The timing and standards for assessing whether the sale of virtual assets to clients constituted profit were previously the subject of disagreement between businesses and their auditors. According to these regulations, if corporations sell virtual assets, the transactions will be recorded as profit following the company’s satisfaction of its holders’ responsibilities.

Authorities in South Korea are certain that the new regulations would increase investor protection and market transparency while fostering the expansion of the nation’s cryptocurrency economy. 

According to the crypto statistics portal Xangle, a good part of the world’s cryptocurrency investors are from South Korea. At the end of 2022, the Korean won ranked third among all currencies used in Bitcoin transactions, after the US dollar and the Japanese yen.

South Korea And Crypto Regulations

The nation is frequently acknowledged as Asia’s hub for cryptocurrency activities. According to estimates, the Korean market accounts for close to 30% of all cryptocurrency trading activity worldwide.

The Virtual Asset Protection Act, which aims to tighten regulations against market manipulation and restrict insider trading, was approved by South Korea’s parliament late last month. According to the FSC, this rule prompted additional modifications to the accounting procedures for digital assets.