South Korea is making preparations to introduce a new law that will impact the cryptocurrency industry. The country’s Financial Services Commission (FSC) is working on a bill that will impose stricter qualifications for major shareholders and reform the governance structures of virtual asset exchanges. Chairman Kim Byung-hwan made this announcement during a state audit conducted by the National Assembly’s Political Affairs Committee on October 24.
According to Chairman Kim, the current laws in South Korea do not provide a legal basis for investigating large shareholders of virtual asset exchanges. To address this gap, a revision to the Private Financial Information Law has been submitted to the National Assembly. This revision will enable the investigation of major shareholders in the cryptocurrency industry.
The issue of unregulated major shareholders in virtual asset exchanges was brought up by People’s Power Party lawmaker Kwon Seong-dong, who highlighted the lack of supervision compared to traditional financial institutions. Kwon emphasized that while banks have procedures in place to check the qualifications of major shareholders, there are no such procedures for virtual assets.
Kwon specifically mentioned Bithumb, one of the largest cryptocurrency exchanges in South Korea, and raised concerns about its governance structure being influenced by former Chairman Lee Jung-hoon and Initial 1 Investment Association. Lee is currently on trial for fraud, while Kang Jong-hyun, the de facto owner of Initial 1 Investment Association, has been arrested on charges of embezzlement and stock price manipulation.
Kwon called on the FSC to take swift action in identifying major shareholders, assessing their ethical standing, and ensuring their social credibility. He urged the commission to act promptly in order to gain a clear understanding of who the major shareholders are, their ethical soundness, and their social credibility.
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