South Korea’s financial regulator addresses insider trading concerns after the “Coin Gate” scandal, implementing stricter rules for FSC staff and inspiring potential global adoption.
- South Korea’s top financial regulator addresses concerns of insider trading among lawmakers and officials after the “Coin Gate” scandal.
- The FSC updates its Code of Conduct, prohibiting FSC staff working with virtual assets from investing in cryptocurrencies using undisclosed information.
- Disclosure requirements apply to current and past public officials involved in virtual asset-related duties, with a new form to report virtual asset possession.
In the aftermath of the “Coin Gate” scandal, the top financial regulator in South Korea is taking steps to address concerns of insider trading among lawmakers and public officials. The scandal emerged when a Member of Parliament (MP) was accused of selling cryptocurrencies before the introduction of new crypto regulations. It was later revealed that the MP was part of a crypto-related parliamentary subcommittee at the time.
🚨 BREAKING: 🇰🇷 South Korea just passed a groundbreaking #Crypto Bill to PROTECT users 🔥
This is BIG! Here’s what you need to know 😱
A thread 🧵 pic.twitter.com/VX7qtp3LIX
— Keyur Rohit (@CryptoKingKeyur) July 3, 2023
Expanding Disclosure Requirements to the Financial Services Commission (FSC)
Following the outcry for transparency in the wake of “Coin Gate,” the Financial Services Commission (FSC), South Korea’s main government agency responsible for regulating the crypto industry, has updated its Code of Conduct for employees. The new code prohibits FSC staff working with virtual assets from investing in cryptocurrencies using undisclosed information obtained while performing their duties. Furthermore, any FSC staff members who own cryptocurrencies are required to report their holdings to the commission.
Scope of Disclosure Requirements
The disclosure requirements apply to public officials currently involved in virtual asset-related duties, as well as employees who have performed such duties in the past six months. These individuals must complete a new form called the “Report on the Possession of Virtual Assets,” which includes details such as the type of virtual assets held, the date of acquisition, and the quantity of tokens owned.
Process for Implementation
While the FSC is eager to put the new code into action, it will require legislative changes for enforcement. Officials at the FSC are optimistic about completing the legislative process in the second half of this year. The commission aims to fast-track the necessary steps to ensure prompt implementation.
Implications for Other Countries
South Korea and Japan are considered trailblazers in crypto regulation, and their efforts may inspire other nations to follow suit. Several countries have already introduced legislation requiring public officials to declare their cryptocurrency holdings. Ukraine, for example, passed laws mandating sitting MPs to disclose all assets, including cryptocurrencies. Such declarations have sparked controversy regarding the extensive crypto holdings of Ukrainian MPs, prompting questions about the sources of their token accumulations.