South korean top regulator considers easing cryptocurrency regulations năm 2024

Binance last week reportedly announced plans to reduce its stakes in local exchange Gopax to ease regulatory concerns.

South Korea’s Financial Services Commission (FSC) proposed new amendments on Monday that would mandate new executives at crypto companies to obtain regulatory approval before assuming duties, potentially giving the financial watchdog more authority over the local crypto sector.

The FSC said in the announcement that it intends to “improve” pain points of the current law that oversees the local crypto industry. If enacted, new executives at South Korean crypto companies will not be able to start work until the FSC approves their personnel change applications, a requirement not currently detailed in the country’s law on the use and reporting of financial transaction information.

The amendments are set to undergo revision by the Ministry of Government Legislation and a voting process by the FSC, and are expected to enact at the end of March, according to local news outlet Money Today.

The proposed amendments also seek to give the FSC the authority to suspend the review of a crypto company’s license registration if the company or its members are being investigated by local or international regulators.

Such amendments would empower the FSC to revoke a company's registration if it violates the Act on Corporate Governance of Financial Companies by improperly electing an executive, according to the notice. This would effectively bar individuals — who have been sentenced to a fine or more severe penalties for any crime and have not yet completed five years since the execution of their sentence — from becoming executives at a crypto firm.

Last week, Binance reportedly said that it is exploring ways to reduce its stake in South Korean exchange Gopax, where it currently serves as the largest shareholder, to address concerns from the FSC. The FSC has delayed approving Gopax’s structural change since Binance’s acquisition, possibly taking issue with Binance’s legal trouble in the U.S.

The FSC is soliciting public feedback on the proposed amendments until March 4. The regulator did not immediately respond to The Block’s request for further comment.

Update: Added more details from the notice

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About Author

Danny Park is an East Asia reporter at The Block writing on topics including Web3 developments and crypto regulations in the region. He was formerly a reporter at Forkast.News, where he actively covered the downfall of Terra-Luna and FTX. Based in Seoul, Danny has previously produced written and video content for media companies in Korea, Hong Kong and China. He holds a Bachelor of Journalism and Business Marketing from the University of Hong Kong.

One key consideration is approving a Bitcoin spot Exchange Traded Fund (ETF), a financial tool mirroring Bitcoin’s price movements, providing investors exposure without direct ownership.

Additionally, the party is contemplating easing restrictions on institutional investments in virtual assets, including activities like Initial Exchange Offerings (IEOs), indicating a potential expansion of institutional involvement in the virtual asset sphere.

Local media, News1 reports that the People Power Party aims to support the growing virtual asset industry and attract votes from the tech-savvy younger demographic.

To achieve this, the party pledges to create a committee with the power to propose laws and enforce sanctions for virtual asset organizations.

The party also emphasizes the need for financial entities dealing with digital asset products, like Spot Bitcoin ETFs, to implement measures for protecting investors.

Additionally, there is a review underway for the long-awaited proposal to allow corporations to invest in virtual assets.

Initially, the plan is to allow investment for asset management purposes, with a gradual extension to corporations that prioritize the safety of customer funds.

Other proposed actions include introducing Virtual Asset Exchange Offerings (IEOs) as part of President Yoon Seok-Yeol’s agenda, completing legislation for token securities (ST) this year, resolving policy discrepancies related to virtual assets, and aiming for consistent regulations. The National Assembly election is expected to take place by April 2024.

As of 2022, it is estimated that nearly 30% of all crypto trading worldwide is powered within the Korean market, and about 3.9% of South Korea’s total population owns cryptocurrency.

The country can be described as the crypto hotspot of Asia and has been an early adopter of new technology, with a significant portion of its young generation investing in cryptocurrencies as a path to prosperity.

In 2023, South Korea enacted legislation on virtual assets to bring cryptocurrency markets under regulatory control for investor protection.

The country’s Financial Services Commission (FSC) announced that crypto criminals committing illicit market acts could face criminal punishments, including life imprisonment, upon the commencement of the country’s new crypto law.

What regulates Cryptocurrency?

Who Is the Crypto Regulator? In the U.S., who regulates crypto depends on how and where it is used. The Securities and Exchange Commission, the Chicago Mercantile Exchange, the Commodity Futures Trading Commission, and the Financial Industry Regulatory Authority are all involved in some regard.

What regulations are needed for Cryptocurrency?

Sales regulation The sale of cryptocurrency is generally only regulated if the sale (i) constitutes the sale of a security under state or federal law, or (ii) is considered money transmission under state law or conduct otherwise making the person a money services business (“MSB”) under federal law.