South Korea proposes vetting process for crypto executives to strengthen oversight
Quick Take
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The proposed amendments could give the local regulator more authority over the crypto sector.
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Binance last week reportedly announced plans to reduce its stakes in local exchange Gopax to ease regulatory concerns.
South Korea’s Financial Services Commission (FSC) proposed new amendments on Monday that would mandate new executives at crypto companies to obtain regulatory approval before assuming duties, potentially giving the financial watchdog more authority over the local crypto sector.
The FSC said in the announcement that it intends to “improve” pain points of the current law that oversees the local crypto industry. If enacted, new executives at South Korean crypto companies will not be able to start work until the FSC approves their personnel change applications, a requirement not currently detailed in the country’s law on the use and reporting of financial transaction information.
The amendments are set to undergo revision by the Ministry of Government Legislation and a voting process by the FSC, and are expected to enact at the end of March, according to local news outlet Money Today.
The proposed amendments also seek to give the FSC the authority to suspend the review of a crypto company’s license registration if the company or its members are being investigated by local or international regulators.
Such amendments would empower the FSC to revoke a company's registration if it violates the Act on Corporate Governance of Financial Companies by improperly electing an executive, according to the notice. This would effectively bar individuals — who have been sentenced to a fine or more severe penalties for any crime and have not yet completed five years since the execution of their sentence — from becoming executives at a crypto firm.
Last week, Binance reportedly said that it is exploring ways to reduce its stake in South Korean exchange Gopax, where it currently serves as the largest shareholder, to address concerns from the FSC. The FSC has delayed approving Gopax’s structural change since Binance’s acquisition, possibly taking issue with Binance’s legal trouble in the U.S.
The FSC is soliciting public feedback on the proposed amendments until March 4. The regulator did not immediately respond to The Block’s request for further comment.
Update: Added more details from the notice
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