South Korea's Financial Services Commission (FSC) has introduced proposed amendments to the virtual asset service provider (VASP) reporting requirements, aiming to enhance regulatory oversight in the cryptocurrency sector. The key proposal involves giving the FSC the authority to screen and approve executives joining crypto companies. If enacted, this regulation would require crypto firms to report changes in personnel to the financial regulator, and new executives would need FSC approval before assuming their roles.
The proposed changes are expected to go into effect by the end of March 2024, following necessary procedures such as review by the Ministry of Government Legislation and resolution by the FSC. The rules will apply to VASP renewal reports in the latter part of 2024.
Additionally, the amendments would impact the renewal of VASP licenses, allowing the FSC to suspend the review for VASP license registrations if ongoing investigations by local or international authorities involve the company's personnel.
The FSC is seeking public feedback on the proposed amendment until March 4, as part of the regulatory efforts to introduce stricter measures in South Korea's cryptocurrency space. The move follows earlier concerns expressed by the Financial Intelligence Unit about the use of crypto mixers for potential money laundering.
In January, the FSC also addressed issues related to illegal outflows and money laundering, proposing changes to credit finance laws to prohibit locals from purchasing cryptocurrencies with credit cards. These regulatory developments reflect South Korea's commitment to strengthening its regulatory framework for the cryptocurrency industry.
The amendments seek to enhance the overall reporting process, providing clarity and predictability for VASPs. These changes come as South Korea aims to strengthen its position in the virtual asset market while ensuring compliance with regulatory standards. The regulatory measures are expected to be implemented during the renewal reports in the second half of the year.