South Korea Shifts Crypto Exchange Shareholder Reviews to New Digital Asset Act

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South Korea Shifts Crypto Exchange Shareholder Reviews to New Digital Asset Act

South Korea’s Financial Services Commission (FSC) is advancing a plan to transfer the eligibility review process for major shareholders of cryptocurrency exchanges from the current financial information act to a newly proposed Digital Asset Basic Act. The move, reported by local media outlet iNews24, aims to consolidate crypto-specific regulations under a single, dedicated legal framework.

Regulatory Transition Details

Currently, virtual asset service providers (VASPs) in South Korea are subject to shareholder eligibility reviews under the Act on Reporting and Using Specified Financial Transaction Information. An amendment to this act, scheduled to take effect on August 20, will broaden the scope of these reviews. Previously limited to CEOs and executives, the new rules will also apply to the largest shareholders and other individuals who exert significant influence over management.

However, the FSC intends to move these shareholder review provisions out of the financial information act and into the forthcoming Digital Asset Basic Act. This legislative shift is designed to create a more coherent and industry-specific regulatory environment for digital assets, improving legal consistency and reducing the patchwork of rules that currently govern the sector.

Implications for Crypto Exchanges

For cryptocurrency exchanges operating in South Korea, this transition signals a maturing regulatory landscape. The move to a dedicated digital asset law suggests that authorities are moving beyond treating crypto firms under general financial reporting rules and toward a tailored supervisory approach. Exchanges will need to prepare for potentially more rigorous and specific compliance requirements under the new act, particularly concerning the background and financial integrity of their largest shareholders.

Why This Matters

South Korea is one of the world’s most active cryptocurrency markets, and its regulatory decisions often set precedents for other jurisdictions. By centralizing exchange governance rules within a digital asset-specific law, the FSC is reinforcing its commitment to investor protection and market integrity without stifling innovation. For market participants, this provides clearer regulatory expectations and reduces the risk of conflicting legal interpretations.

Conclusion

The FSC’s plan to incorporate major shareholder review rules into the Digital Asset Basic Act represents a significant step in South Korea’s evolving crypto regulatory framework. As the August deadline for the expanded review scope approaches, exchanges and investors should monitor the legislative process closely for further details on compliance timelines and specific requirements under the new act.

FAQs

Q1: What is the Digital Asset Basic Act in South Korea?
A: It is a proposed comprehensive law being developed by the FSC to specifically regulate digital assets, including cryptocurrencies, exchanges, and related services, replacing the current reliance on general financial laws.

Q2: Why is the FSC moving these rules to a new act?
A: The primary goal is to improve legal consistency by placing all crypto-related regulations within a single, dedicated industry-specific legal framework, rather than having them scattered across different financial laws.

Q3: When will the new shareholder review rules take effect?
A: The expanded review scope under the existing act is set to take effect on August 20. However, the FSC plans to transfer these rules to the Digital Asset Basic Act at a later date, which will be determined as the legislative process for the new act progresses.

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