South Korea’s financial watchdog, the Financial Services Commission (FSC), has introduced proposed amendments to reporting requirements for virtual asset service providers (VASPs), with an expected effective date by the end of March 2024.
The proposed amendment suggests a significant change, requiring regulatory approval from the FSC for new executives joining crypto projects before they commence their roles in crypto companies. If enacted, the law will mandate crypto firms to report any changes in personnel to the financial regulator. This implies that executives cannot assume their roles until the FSC approves the submitted personnel change report.
Local news outlet Money Today anticipates the amendment to undergo various procedures, including review by the Ministry of Government Legislation and approval by the FSC, leading to its expected implementation by the end of March 2024. Once finalized, these rules will be applicable to VASP renewal reports scheduled for the second half of 2024.
Additionally, the proposed rules will impact a company’s ability to renew VASP licenses. The amendments aim to empower the FSC to suspend the review process for VASP license registrations if there are ongoing investigations by local or international authorities into the company’s personnel.
The South Korean regulator has invited public feedback on the proposed amendment, with a deadline for comments set for March 4. This move is part of broader efforts by South Korea’s regulators to implement stricter regulations within the country’s cryptocurrency space. On January 15, local outlet Decenter reported that South Korea’s Financial Intelligence Unit is actively working on legislation related to crypto mixers, with an intention to introduce regulations akin to those in the United States, as concerns about money laundering through crypto mixers rise.
In an earlier instance in January, the FSC expressed apprehensions about potential illegal outflows and money laundering associated with South Korean residents purchasing crypto from foreign exchanges. On January 3, the regulator published a legislative notice proposing amendments to credit finance laws, intending to prohibit locals from using credit cards to buy cryptocurrencies.