South Korea’s FSC to Submit Two Crypto-Related Acts to National Assembly

According to Newsis on July 13, the People’s Power Party and the Financial Services Commission of South Korea are planning to submit amendments to the Electronic Securities Act and the Capital Market Act to the National Assembly within this month. The amendments aim to institutionalize token securities. Representative Yoon Chang-hyun of the People’s Power Party, a member of the Political Affairs Committee, will lead the proposal.

Token Securities are securities issued in token form using blockchain technology. They enable the trading of various rights that were difficult to issue as traditional electronic securities. Theoretically, all assets, including commercial buildings, artworks, luxury goods, and intellectual property rights (IP), can be tokenized. This is why the securities industry anticipates new innovative businesses utilizing ST.

In preparation for the legislation, the Policy Committee, Political Affairs Committee, and the Special Committee on Digital Assets of the People’s Power Party will hold a public hearing at 10 a.m. today. The hearing will discuss the legislation that has been prepared so far, under the title “Venture Start-up Energy UP STO (Security Token Offering)”.

The upcoming legislation is expected to reflect the ‘Token Securities Issuance and Distribution Regulation System Improvement Plan’ announced by the Financial Services Commission in February. The improvement plan includes amending the Capital Market Act and the Electronic Securities Act to enable the issuance of token securities and establishing new account management institutions and over-the-counter trading brokerage businesses related to issuance and distribution.

Furthermore, on July 11, the Financial Services Commission (FSC) unveiled a new legislation mandating all companies that issue or manage cryptocurrencies, such as Bitcoin and Ethereum, to reveal their holdings. The objective of this bill is to augment transparency in the accounting and disclosure of crypto assets, adhering to supervisory guidelines that necessitate the accounting of every transaction involving cryptocurrencies.

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South Korea Grants Central Bank More Power Over Crypto

The Bank of Korea (BoK) has been granted increased power to investigate cryptocurrency service providers and issuers, as discussions on virtual asset legislation continue in South Korea. According to a report by The Korea Herald, the BoK will now have the right to scrutinize cryptocurrency-related businesses and request transaction data from digital currency operators.

The BoK has been in competition with the country’s financial regulator, the Financial Services Commission (FSC), over who should govern the regulation of the digital asset sector. While the BoK has expressed concerns over the financial stability risks associated with stablecoins, the FSC has warned that if the central bank governs crypto, it will send the message that digital assets have the same standing as traditional finance.

Despite the ongoing debate, the BoK’s right to request data from crypto exchanges has been confirmed by an official from the National Assembly’s Political Affairs Committee. The FSC will express its official position at a subcommittee meeting on April 25, which is expected to accelerate the rollout of South Korea’s virtual asset laws.

The South Korean government has been trying to push forward crypto legislation, but there have been arguments between the central bank and the FSC over who should control it. Democratic Party lawmaker Kim Han-gyu, who proposed the Crypto Assets Act, said that while the FSC admits it is necessary for the BoK to have the right to request data, it is refusing to include it in the bill.

The latest development means that both the South Korean central bank and its financial regulator will have increased power to investigate crypto operators and have full access to transaction data. This move follows several years of disagreement between the two institutions over crypto regulations.

The FSC has been active recently with enforcement actions against crypto companies and takes the same position as the United States Securities and Exchange Commission in that it considers crypto assets securities. South Korea’s Financial Supervisory Service, which operates under the FSC, announced the creation of an investigative body called the Digital Assets Committee in mid-2022.

In conclusion, the South Korean government is continuing its efforts to regulate the cryptocurrency sector. The Bank of Korea has been granted more power to investigate cryptocurrency-related businesses, and the Financial Services Commission is expected to accelerate the rollout of South Korea’s virtual asset laws. Despite disagreements between the two institutions, both will now have full access to transaction data and be able to investigate crypto operators.


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