Companies holding or trading cryptocurrencies in South Korea will be required to disclose information about
their transactions to the financial regulator, according to the draft rules
released by the country’s Financial Services Commission (FSC) yesterday (Tuesday).
According to the rules, the FSC said that the companies would be required to share information
about the amount of digital assets they hold, the characteristics of the
assets, as well as their business model. Additionally, the draft rules require
companies to disclose profits from cryptocurrencies and the market
value of their holdings.
The new measures, according to the FSC, aim to improve
transparency in accounting for digital assets held by corporations. Additionally,
in the new measures, the regulator recognizes profits from the sale of virtual
assets. However, the cost incurred in developing the assets is not recognized as intangible assets, the announcement stated.
The draft rules are part
of a bigger agenda by South Korea to regulate cryptocurrencies. Finance Magnates reported in May that the country’s ruling
party, People Power Party, was preparing
a bill that required
the lawmakers to declare their crypto holdings.
According to the sources
quoted by Yonap, a media publication in South Korea, the bill aims to enhance
transparency among the legislators regarding their holdings of digital assets. The
bill followed investigations
launched against Kim Nam-kuk,
a former opposition lawmaker in South Korea.
South Korea Regulates
Crypto
Similarly, in March last year, South Korea implemented
the travel rule of the Financial Action Task Force, a global regulator fighting
money laundering and terrorism financing. The rule requires digital exchanges
to report transactions that exceed certain amounts specified by the watchdog.
Besides that, in March,
the South Korean National Assembly passed a law that provides a legal framework
for the regulation of digital assets. Known as the Virtual Asset User
Protection Act, the legislation defines what digital assets are and the
penalties for illegal transactions.
Additionally, the
legislation states that digital service providers should separate users’ assets
from their own and must insure customers’ funds. The digital asset exchanges
are also required to hold sufficient reserves to back…
