The South Korean Financial Services Commission Introduces New Regulations for Virtual Asset Business Operators

The South Korean Financial Services Commission Introduces New Regulations for Virtual Asset Business Operators

The South Korean Financial Services Commission (FSC) recently announced significant legislative amendments aimed at tightening regulations surrounding virtual asset business operators. The amendments, outlined in Finance Commission Notice No. 2024-30, are designed to ensure greater compliance and oversight in the rapidly evolving virtual asset sector.

One of the key changes proposed is the introduction of stringent requirements for changes in the management of virtual asset businesses. Under the new regulations, any alteration in the representative or executive positions within these businesses must be reported and approved before the new appointees can officially assume their roles. This measure aims to prevent disruptions and maintain stability within these often volatile entities.

The South Korean government’s goal is to foster a more stable and trustworthy environment for businesses and consumers in the virtual asset industry. By holding leaders within this sector to higher accountability standards, they aim to instill confidence and promote responsible practices.

In addition to the requirements for management changes, the amendment introduces several other modifications to enhance the regulatory framework for virtual assets. It simplifies the reporting processes for virtual asset businesses by establishing pre-reporting and post-reporting mechanisms, potentially exempting certain changes from undergoing a comprehensive review.

Financial institutions are also subject to more stringent criteria when issuing real-name accounts to virtual asset operators. They must demonstrate their capability in terms of human and infrastructural resources, as well as adhere to due diligence and legal compliance.

The amendment also outlines procedures for the suspension and subsequent resumption of report reviews in cases where there are delays in verifying necessary facts. It defines conditions under which authorities can cancel reports without prior notice, especially when a financial transaction order is significantly disturbed due to legal violations or misconduct by executives.

These measures aim to enhance the efficiency and effectiveness of the regulatory process, ensuring that necessary actions can be taken promptly to address any issues or violations that may arise.

The Financial Services Commission is seeking public input on the amendment until March 4, 2024. This open consultation period reflects the government’s dedication to transparency and stakeholder engagement in the legislative process.

Individuals and organizations are encouraged to review the proposed changes and submit feedback, contributing to a more inclusive and well-rounded regulatory framework. The government recognizes the importance of diverse perspectives and aims to consider all relevant input before finalizing the regulations.

The South Korean Financial Services Commission’s recent legislative amendments aim to strengthen regulations surrounding virtual asset business operators. By introducing stricter requirements for management changes, simplifying reporting processes, and enhancing oversight, the government seeks to foster stability, trustworthiness, and accountability within the virtual asset industry. The open consultation period allows for public input, reflecting the government’s commitment to transparency and stakeholder engagement. Through these efforts, South Korea aims to establish a robust regulatory framework that promotes responsible practices and protects the interests of both businesses and consumers in the virtual asset sector.

Regulation

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