South Korea Proposes Stricter Crypto Regulations

South Korea’s Financial Services Commission (FSC) proposes a crypto amendment requiring regulatory approval for new project executives.

An amendment was proposed by South Korea’s financial watchdog that would mandate that new crypto project executives obtain regulatory permission prior to commencing employment with crypto enterprises.

A significant revision to the reporting rules for virtual asset service providers (VASPs) was suggested by the Financial Services Commission (FSC) on February 5th. The purpose of the proposal is to grant the FSC the power to vet executives before they join cryptocurrency startups. If passed into law, the measure would require cryptocurrency companies to notify the financial authority of any employee changes. Accordingly, executives will have to wait for the FSC to approve their personnel change report before they can begin working for the company.

After undergoing many processes, such as a review by the Ministry of Government Legislation and a resolution by the FSC, local news site Money Today anticipates that the modification will be put into effect by the end of March 2024. Renewing VASP reports due in the second half of 2024 will be subject to the new regulations once the ordinance is amended.

Companies’ capacity to renew their VASP licenses will also be impacted by the proposed regulations. If the FSC learns that its employees are the subject of an investigation by either domestic or foreign authorities, it will be able to halt the evaluation of VASP license registrations, according to the proposed changes.

Public input on the proposed change is being sought after by the South Korean regulator. The deadline for public comments on the proposal is March 4.

The crypto ecosystem in South Korea is about to face stricter laws, according to the country’s officials. The Financial Intelligence Unit of South Korea is reportedly drafting crypto mixer laws as of January 15th, according to local news outlet Decenter. Given the increasing use of crypto mixers as a means of money laundering, the regulator is planning to implement regulations modeled after those in the US.

When South Koreans purchase cryptocurrency from outside exchanges, the FSC voiced worries earlier this month about the possibility of illicit outflows and money laundering. The authority announced a plan to ban residents from using credit cards to purchase cryptocurrency in a legislative notice released on January 3.