The South Korean financial regulator has made it mandatory for its employees to declare their cryptocurrency holdings following the “Coin Gate” scandal. Lawmakers in the country have faced allegations of insider trading, with one Member of Parliament (MP) accused of selling tokens prior to the implementation of a new crypto regulation. The MP was discovered to be serving on a crypto-related parliamentary subcommittee during that time. In response to the scandal, demands for transparency in crypto holdings have been made by MPs, regulators, and public officials. As a result, the Financial Services Commission (FSC), the nation’s leading financial regulator, has extended this requirement to its own staff.
Code of Conduct Update
The FSC, responsible for regulating South Korea’s cryptocurrency industry and conducting spot-checks on domestic crypto exchanges, recently revised its Code of Conduct for employees. The updated code prohibits staff working with “virtual assets” from investing in cryptocurrency using undisclosed information obtained while performing their duties. It also mandates that employees who own tokens must report this information to the FSC. The restriction on crypto trading applies to both current public officials involved in virtual assets and employees who were engaged in such activities within the past six months.
Reporting Requirements
Under the new regulations, employees are required to submit a form called the “Report on the Possession of Virtual Assets.” This form mandates crypto-holding staff to disclose details such as the type of virtual assets held, the date of acquisition, and the quantity of tokens owned. Although the FSC needs legislative changes to implement the updated code, it aims to expedite this process and complete it by the second half of the year.
Global Implications
South Korea and Japan are recognized as pioneers in crypto regulation, indicating that other countries might follow suit. Some regions have already introduced legislation requiring specific public officials to declare their cryptocurrency holdings. Ukraine, for instance, enforced laws that necessitate sitting MPs to disclose all assets, including cryptocurrencies. The revelation of substantial crypto caches held by Ukrainian MPs has sparked public outrage and raised questions about the origins of their extensive token portfolios.
In summary, the South Korean financial regulator now mandates its employees to disclose their cryptocurrency holdings in response to the “Coin Gate” scandal. The revised Code of Conduct forbids staff involved in virtual assets from trading cryptocurrency using undisclosed information obtained during their duties. Employees who possess tokens must report the details to the FSC. While legislative changes are necessary for implementing the updated code, South Korea’s proactive approach to crypto regulation suggests that other nations may adopt similar measures in the future.
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