South Korea’s FSC proposes new reporting requirements for crypto firms

South Korea’s FSC proposes new reporting requirements for crypto firms

The South Korean Financial Services Commission (FSC) has proposed changes to virtual asset service providers’ (VASPs) reporting requirements in order to increase regulatory control over the fast-growing cryptocurrency industry. The proposed changes require cryptocurrency companies to report changes in staff, particularly at the executive level, to the FSC for approval before they can take on their roles. This move signals the FSC’s intention to tighten its grip on the industry by gaining control over executive movements within crypto firms. The FSC will be able to stop the processing of VASP licence registrations if the proposed executives are being investigated by local or international regulatory bodies.

FSC’s Comprehensive Approach

The proposed regulations will make significant changes to the licence application procedure for cryptocurrency companies, requiring that executive changes be reported and approved in advance, adding another layer of scrutiny to an already complicated process. This could have an impact on cryptocurrency firms’ operational efficiency and agility because they will have to navigate additional regulatory hurdles. The amendments are expected to be implemented by the end of March 2024, following a series of procedural stages, including an evaluation by the Ministry of Government Legislation and a resolution by the FSC.

Addressing Money Laundering Risks

South Korean regulators are working to tighten regulations for the country’s crypto space, with the Financial Intelligence Unit developing standards for crypto exchanges. As the use of cryptographic instruments to facilitate money laundering grows, the regulator plans to implement regulations similar to those in the United States. In January, the FSC expressed its worry about potential illegal outflows and money laundering when South Koreans purchase cryptocurrency from foreign exchanges.

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