South Korea Requires Full Disclosure from Crypto Companies
- South Korea is also preparing guidelines for the auditing process.
- South Korea currently requires public servants to disclose their cryptocurrency holdings.
- The FSC said the new bill was part of its efforts to increase transparency in crypto-related transactions.
Authorities in South Korea are bent on safeguarding the digital asset market and have passed a new policy that requires crypto companies to disclose their holdings. The country’s financial regulator, the Financial Services Commission (FSC), announced the bill on Tuesday after considering other related proposals
The new policy mandates companies issuing or dealing with cryptocurrencies such as Bitcoin to disclose their holdings in their financial statements. The implementation of the new regulation is scheduled to take place in January 2024.
The FSC demands crypto service providers in South Korea provide information such as the nature and amount of their cryptocurrencies, their business models, and internal accounting procedures for the sale of cryptocurrencies and related profits.
Furthermore, the policy requires companies holding cryptocurrencies for investment purposes to provide details such as the market value of their assets, book value, and the token’s classification.
The FSC said the new bill was part of its efforts to increase transparency in crypto-related transactions and accounting. South Korean companies have often disagreed with their auditors on the timing and standards for deciding when the sale of virtual assets to clients should be considered profit. However, the new policy provides clarity.
The rule recognizes the sale of virtual assets as profit if the company fulfills its obligation to the holders. Additionally, the costs related to creating virtual assets and the platforms on which they run won’t be classified as intangible assets.
As part of its digital reforms, local reports revealed that the FSC had recently asked internal staff members to disclose any cryptocurrency holdings as required by the Specific Financial Information Act. Employees who currently conduct crypto-related tasks and those who have done so over the past six months are among those who are impacted by the policy.
South Korea has made remarkable progress in adopting cryptocurrencies. However, the country is yet to recover from the shock of the collapse of the Terra ecosystem in May 2022, which wiped off $40 billion of investors’ funds.
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