South Korea Targets Crypto Major Shareholders with Proposed Financial Law Amendment

Key Takeaways

South Korean lawmaker Yoon Chang-hyun proposes an amendment to scrutinize the criminal records of major shareholders in crypto businesses.

The Financial Intelligence Unit (FIU) is also focusing on the eligibility of major shareholders.

The amendment aims to bring transparency and regulatory compliance to the crypto market.

Legislative Intent

On September 15, Yoon Chang-hyun, a lawmaker from the People Power Party, proposed an amendment to the Special Financial Information Law (특금법). The amendment aims to scrutinize not just the CEOs and registered executives but also the major shareholders' criminal records during the application and review process for crypto businesses, according to decenter.

Regulatory Focus

The Financial Intelligence Unit (FIU) has also formed a Task Force (TF) to revise the requirements for crypto exchange reporting and will focus on the eligibility of major shareholders. An official from Yoon Chang-hyun's office stated, "We have consulted with financial authorities and initiated the bill."

Legal Risks and Implications

The proposal comes against the backdrop of legal risks involving major shareholders in crypto exchanges. For instance, Song Chi-hyung, the chairman of Dunamu (operator of Upbit), is awaiting a Supreme Court trial for allegations of creating fake accounts and manipulating transactions. Similarly, Lee Sang-jun, the CEO of Bithumb Holdings, is under investigation for receiving 'listing fees' from Kang Jong-hyun, who is suspected of being the real owner of Bithumb.

Compliance Requirements

If the amendment is enacted, existing crypto businesses will have to report details about their major shareholders within three months. Those found guilty post-enactment will likely be disqualified during the review process. The law will not be retroactive but will require crypto businesses to renew their reporting every three years.

Conclusion

The proposed amendment reflects the legislative intent to integrate the often-volatile crypto market into the regulatory framework. The focus on major shareholders' eligibility aims to bring a level of transparency and trustworthiness akin to traditional finance.