South Korea's Financial Services Commission (FSC) has proposed significant changes to its reporting requirements for virtual asset service providers (VASP) to regulate the employment of executives in the sector. This amendment would mandate the vetting for executives joining crypto firms.
The proposed changes target crypto executives, requiring regulatory approval before they can start working in crypto companies. According to a statement on the South Korean government's website, this move aims to provide the FSC with authority over personnel changes in the crypto industry. If approved, it will affect the renewal of the VASP licenses.
Impact on License Renewals
Under the proposed rules, companies seeking to renew their VASP licenses would face scrutiny regarding their personnel. The FSC would have the power to suspend license reviews if authorities are investigating the company's personnel for any reason.
Before the amendment becomes law, the FSC is seeking public feedback until March 4, 2024. The proposed changes are expected to be effective by the end of March 2024, following reviews and resolutions by relevant authorities.
Recently, South Korea's government took a decisive step to address the increasing risks of money laundering facilitated by crypto mixers. The country's financial authorities plan to implement regulations targeting these digital tools, which have become popular among illegal organizations for concealing illicit transactions.
The Need for Regulation
In light of the vulnerability of the financial system to money laundering , South Korea aims to restrict transactions using crypto mixers by virtual asset business operators. Additionally, the country plans to monitor global trends and engage in international discussions to formulate a strategy against the misuse of crypto mixers.
This approach aligns with recent actions by the US Treasury Department's FinCEN, which imposed stringent requirements on domestic financial institutions involved in transactions with crypto mixers.
Besides that, the FSC has banned crypto users in South Korea from using credit cards to purchase cryptocurrencies, citing concerns about the illegal outflow of domestic funds and other related risks. According to the regulator, this move addresses concerns regarding the illegal outflow of domestic funds overseas.
The FSC expressed worries about the increasing use of credit cards for payments on overseas virtual asset exchanges, raising concerns about money laundering and speculation.
