South Korea proposes a new framework for crypto firms

South Korea proposes a new framework for crypto firms

The report, issued by the Financial Services Commission of the country, details several recommendations relating to cryptocurrencies

By Shashank Bhardwaj

Image: Shutterstock

The South Korean government has commissioned a report that suggests that the local cryptocurrency industry will implement a licensing framework for exchanges and token issuers to protect investors. The report, issued by the Financial Services Commission (FSC) to the National Assembly, also recommends new restrictions to combat insider trading, pump-and-dump scams, and wash trading.

According to the report, the new regulations would be stricter, and the consequences for failing to comply would be harsher than those under the Capital Markets Act, which the domestic crypto industry presently follows. Furthermore, different licenses will be awarded in South Korea depending on how important their services are, and companies that provide crypto trading and custody services have been identified as requiring the highest level of protection in the industry.

One of the proposed recommendations would require coin issuers to submit a white paper to the FSC describing their project, including information about the company’s executives, how the funds obtained through an ICO are used, and the project’s risks. Moreover, updates to the white paper would need to be filed at least seven days before the proposed modifications take effect. Companies with offices outside Korea that want their tokens traded on Korean exchanges must also follow the white paper rule.

Yoon Seok-yeol, South Korea’s new President, was chosen in part because of his interest in learning more about the cryptocurrency sector. He said on May 3 that his administration would push through a law that would extend the tax-free status of crypto investment gains until a solid legal framework is in place. Experts believe this latest report could be the beginning of President Yoon’s crypto visions for the country.