South Korea to publicly disclose public officials’ crypto holdings
South Korea’s government is set to make the cryptocurrency and other asset holdings of about 5,800 public officials available to the public. This new measure, which starts next year, is part of an effort to increase transparency in the government.
Currently, asset disclosures are published in official gazettes, but with the new system, this information will be accessible through the Public Official Ethics System (PETI). The change follows the passage of laws in May requiring public officials to disclose their cryptocurrency holdings, which were spurred by a scandal involving a lawmaker.
The country’s five major domestic crypto exchanges – Upbit, Bithumb, Coinone, Korbit, and Gopax – have plans to develop a separate system by June next year to assist in property registration.
“We expect that the transparency of the public service community will be further increased through the implementation of an integrated service for public official property disclosure and property registration of virtual assets,” the statement reads.
This move comes amid broader regulatory changes in South Korea concerning cryptocurrencies. In June, lawmakers passed legislation to protect crypto investors, granting oversight authority to the Financial Services Commission and the Bank of Korea.
Furthermore, the Financial Services Commission announced in July that domestic companies would be required to disclose cryptocurrency holdings as part of new accounting rules starting 2024.
These rules will also mandate clarity on the timing and criteria for recognizing profits from the sale of virtual assets to address the previous discrepancy between companies and auditors about relevant accounting policies.
Under the regulations, companies will be obligated to include specific information in their disclosures within their balance sheet and financial reports. This includes information on the quantity and characteristics of their crypto tokens, their business models in the crypto business, and internal accounting policies governing the sale of cryptocurrencies and associated profits.
The new regulations come nearly six months after a cryptocurrency scandal involving lawmaker Kim Nam-kuk on charges related to campaign finance violations, tax evasion, and the concealment of criminal proceeds.
South Korea’s Financial Intelligence Unit, the country’s watchdog of the finance and crypto sectors, detected suspicious activity in Kim’s crypto transactions and alerted local prosecutors last year. In a specific instance, Kim exchanged 510,000 Wemix coins, valued at approximately 3.6 billion Korean won (around $2.7 million), for KPS tokens in February 2022.
Nam-kuk, a member of South Korea’s National Assembly, liquidated additional KRW 6 billion ($4.54 million) worth of cryptocurrencies before the implementation of the Financial Action Task Force’s “Travel Rule.” He allegedly sold his digital assets without making proper disclosures to the authorities.
