South Korea’s FSC Proposes Mandatory Licensing for Crypto Executives in New Amendment
South Korea’s FSC proposed implementing regulatory approvals for new executives joining crypto companies, before they can assume their roles.
The Financial Services Commission (FSC) of South Korea proposed new amendments, suggesting a requirement of regulatory approval for new executives joining cryptocurrency companies before commencing their duties. Through this, the FSC intends to address and enhance specific challenges in existing legislation governing the South Korean crypto sector.
If enacted, executives joining cryptocurrency companies in South Korea would be obligated to await approval from the FSC for their personnel change applications before commencing their roles, a requirement not currently specified in the country’s legislation about using and reporting financial transaction information.
Additionally, the suggested amendments aim to empower the FSC with the authority to temporarily halt the assessment of a cryptocurrency company’s license registration if the company or its members become subjects of investigation by local or international regulatory bodies.
Furthermore, the proposed amendments would grant the FSC the authority to cancel a company’s registration if it violates the Act on Corporate Governance of Financial Companies by inappropriately appointing an executive. As per the notice, this provision effectively prevents individuals who have been convicted and sentenced to a fine or more severe penalties from assuming executive roles at a cryptocurrency firm until five years have elapsed since the completion of their sentence.
The proposed amendments are set to undergo revision by the Ministry of Government Legislation and, subsequently, a voting process by the FSC. If approved, the amendments will be effective at the end of March. The FSC has invited public input on the proposed amendments, and the feedback period is set to extend until March 4.
South Korea’s Careful Approach to Crypto
A distinctive licensing framework for virtual asset service providers, encompassing digital wallets, exchanges and similar entities, has been introduced. It mandates compliance with specific standards set by FSC and ongoing reporting obligations to safeguard consumers and mitigate the risks of illicit activities within the cryptocurrency sector, such as money laundering and fraud.
Practically, any service involving digital assets has the potential to be categorized as a virtual asset service provider. Thus, the South Korean government’s imposition of more stringent regulations in the virtual asset sector led to the closure of numerous cryptocurrency exchanges within the country, primarily attributable to the absence of licensing from regulatory authorities.
Recently, Binance announced it is considering strategies to decrease its ownership stake in the South Korean exchange Gopax, which presently holds the most significant shareholder position. This move comes in response to concerns raised by the FSC, which delayed approval of Gopax’s structural changes following Binance’s acquisition, potentially influenced by legal challenges faced by the exchange in the United States.
South Korea’s proposed regulatory amendments reflect a proactive approach to cryptocurrency oversight, highlighting the country’s watchful stance regarding digital assets.
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