Rolling out its tighter regulations targetting the cryptocurrency industry, South Korea is planning to introduce new asset disclosure rules for firms that issue or hold cryptocurrencies. Marking the continuation of South Korea’s efforts to make operational transactions in the crypto world more transparent, the country’s Financial Services Commission (FSC) announced a draft bill requiring extensive disclosure of these entities’ crypto holdings.
Post-analysis of related proposals, the FSC has green signaled this new exposure draft bill that introduces mandatory disclosure requirements for crypto assets. The newly developed measures are designed to enhance transparency in the accounting and disclosure process of the crypto assets. This is congruent with the supervision guidelines that require every crypto transaction to be accounted for.
The draft bill is also working towards a revision of accounting standards that enforce the disclosure of virtual asset transactions. The current draft mentions fungible assets under the purview of distributed ledger technology or “similar technology” and those assets issued using cryptography, in its broad scope of crypto assets to be reported.
In light of revising its crypto accounting supervision guidelines, the FSC has mentioned grounds to include security tokens, digitized securities according to the Capital Markets Act terms, within the guidelines’ application sphere.
A significant catch in the implementation of these new accounting supervision guidelines is its immediate effect. In contrast, the reformed disclosure standards will not be in place until January 1, 2024. The FSC, however, has strongly recommended early applications.
Earlier instances in South Korea mandating a similar sort of asset disclosure requirement, such as the “Kim Nam-guk Prevention Law”, were for public officials but now all local firms are required to disclose crypto holdings. The former initiative was in response to a potential scandal involving public officials appearing to manipulate the market and moving large amounts of crypto.
While it is a welcoming update for followers of transparent crypto methodologies, there is a conspicuous hint at skepticism. The range of crypto assets to be included in the mandatory reporting, according to the FSC’s current crypto accounting supervision guidelines, expands to a large umbrella of “similar technology”. This aspect might raise certain eyebrows regarding what could qualify as similar technology.
Nonetheless, it’s becoming apparent that South Korea is fortifying its control over the cryptocurrency market, bringing somewhat new crypto disclosure rules and norms into motion. This step reflects the insatiable global intent to achieve complete transparency within the crypto industry.
Source: Cointelegraph
