South Korea’s Financial Services Commission (FSC) has announced major legislative changes aimed at tightening regulations around virtual asset business operators, specifically focusing on the responsibility and duties of crypto managers.
The partial amendment of the Enforcement Decree of the Law on Reporting and Use of Specific Information on Financial Transactions, under Financial Commission Communication No. 2024-30, introduces measures to improve compliance and supervision in the rapidly evolving sector of virtual guarantee assets.
Screening managers
Central to the proposed changes is the introduction of strict requirements for changes in the management of virtual asset companies.
Under the new regulations, any change in representative or managerial positions within such companies must be reported and approved before the new appointees can officially take over their roles.
This measure is intended to prevent disruptions and keep a steady hand at the helm of these often unstable and technologically advanced entities. The government aims to promote a more stable and trustworthy environment for businesses and consumers by holding leaders within the virtual assets industry to higher standards of accountability.
Other amendments
The amendment also introduces several other changes to improve the regulatory framework for virtual assets. It simplifies reporting processes for virtual asset companies by establishing pre- and post-reporting mechanisms, potentially exempting certain changes from comprehensive review.
In addition, financial institutions must meet stricter criteria when issuing real name accounts to virtual asset managers, including proving their capabilities in human and infrastructure resources and adhering to due diligence and regulatory compliance.
In addition, the amendment outlines procedures for the suspension and subsequent resumption of report reviews when delays occur in verifying necessary facts. It also defines the conditions under which authorities can cancel reports without notice, especially when a financial transaction order is significantly disrupted due to legal violations or executive misconduct.
The Financial Services Commission is seeking public input on the amendment until March 4, 2024. This open consultation period reflects the government’s commitment to transparency and stakeholder involvement in the legislative process. Individuals and organizations are encouraged to review and provide feedback on the proposed changes, contributing to a more inclusive and well-rounded regulatory framework.