South Korea to screen major shareholders of crypto exchanges over eligibility concerns

Financial authorities successful South Korea mean to initiate stringent eligibility reviews for large shareholders of cryptocurrency exchanges, mirroring the standards upheld wrong the banking sector, section media reported connected Sept. 22.

The determination comes amid expanding ineligible turmoil involving shareholders of salient home exchanges specified arsenic Bithumb and Upbit.

Rule reform

The Financial Intelligence Unit (FIU) nether the Financial Services Commission has assembled a task unit to betterment coin speech reporting requirements. This revised mandate volition beryllium integrated into the coin speech renewal reporting items for implementation successful Oct. 2024. It volition service arsenic a cornerstone for aboriginal operations of existing exchanges successful the country.

According to the Enforcement Decree of the Specific Financial Information Act, each virtual plus concern operators, including exchanges, indispensable record a renewal study each 3 years station archetypal study acceptance. This process volition recommence successful Oct. 2024, opening with Upbit, which finalized the inaugural study acceptance successful Oct. 2021.

The task unit volition chiefly ore connected scrutinizing large shareholder eligibility, a procedural safeguard allowing the authorities to periodically measure whether the bulk shareholder retains the qualifications requisite to run a fiscal enterprise.

The inaugural by FIU aims to curb illicit activities by large shareholders who wield important power implicit the coin speech businesses and to mitigate idiosyncratic damage.

Previously, large shareholders operated successful a regulatory grey area, with existent authorities nether the Special Financial Services Act mandating lone speech representatives and registered executives to study and acquisition reappraisal erstwhile declaring a virtual plus business.

Lawmakers privation heightened scrutiny.

According to media reports, the engagement of large shareholders of home exchanges successful fraudulent and market-manipulative activities has spurred the introspection of large shareholders.

The 2 astir salient cases impact large Bithumb shareholder Jong-hyun Kang, who is embroiled successful a primary transgression trial for alleged fraudulent trading, and Dunamu Chairman Song Chi-hyung, the predominant shareholder of Upbit, who is presently facing a Supreme Court proceedings for purported marketplace manipulation.

Representative Yoon Chang-hyeon of the People Power Party has projected a legislative amendment to the Special Financial Services Act, advocating for incorporating a reappraisal strategy for large shareholders of virtual plus concern operators.

The amendment dictates that virtual plus concern operators, including coin exchanges, indispensable study accusation pertinent to large shareholders, enabling the FIU to analyse the company’s superior shareholders’ economical and fiscal transgression history.

The station South Korea to surface large shareholders of crypto exchanges implicit eligibility concerns appeared archetypal connected CryptoSlate.