South Korea’s financial regulatory body, the Financial Services Commission (FSC), has put forward a proposal that could significantly change the way crypto companies operate in the country. Announced on February 5, this new proposal seeks to mandate that incoming executives of cryptocurrency projects obtain regulatory approval before assuming their roles within crypto firms.
According to the proposal, crypto companies must inform the FSC of any changes in their executive lineup. These proposed changes mean that new executives cannot begin their roles until the FSC has reviewed and approved the personnel change report submitted by the crypto firm.
Local media outlet Money Today anticipates that these amendments could be implemented by the end of March 2024, following a series of procedural steps. These steps include a review by the Ministry of Government Legislation and a final resolution from the FSC. Should the ordinance be revised as proposed, the new rules would apply to virtual asset service provider (VASP) renewal reports due in the latter half of 2024.
Moreover, the amendments are designed to influence renewing VASP licenses by allowing the FSC to halt the review process for VASP license registrations if any personnel are under investigation by local or international authorities.
The FSC is currently seeking input from the public regarding this proposed amendment, with the deadline for comments set for March 4.
This move is part of a broader initiative by South Korean regulators to tighten regulations within the country’s cryptocurrency sector. Reports from local news outlet Decenter on January 15 indicated that South Korea’s Financial Intelligence Unit is developing legislation to regulate crypto mixers, echoing regulatory approaches seen in the United States, as concerns rise over using crypto mixers for money laundering activities.
In early January, the FSC also voiced worries about potential illegal outflows and money laundering resulting from South Koreans purchasing cryptocurrencies through foreign exchanges. Consequently, on January 3, the regulator issued a legislative notice proposing amendments to its credit finance laws that would ban locals from purchasing cryptocurrency with credit cards.
