South Korea plans to require virtual asset service providers to share transaction information with counterparties for all crypto transfers, regardless of amount. The government also will require firms to submit details on major shareholders when registering as virtual asset service providers and will spell out grounds for rejecting registrations based on financial condition and social creditworthiness.

According to the Ministry of Government Legislation’s public lawmaking portal on Aug. 10, a revision to the enforcement decree of the Act on Reporting and Use of Certain Financial Transaction Information, prepared by the Financial Services Commission, completed legal review on Aug. 4 and passed a vice ministers’ meeting on Aug. 6. The proposal is scheduled to go before a Cabinet meeting on Aug. 11.

The amendment would significantly expand the information-sharing requirement for crypto transfers. Currently, virtual asset service providers must provide transaction-related information to the receiving provider only when transferring crypto assets worth 1 million won, or about $720, or more. Under the revision, the requirement would apply to all crypto transfers regardless of amount.

The scope of major-shareholder reporting by virtual asset service providers would also be clarified. If a firm's largest shareholder is a corporation, that corporation's largest shareholder and representative would also be subject to disclosure. Required filings would include the beneficial owner's real name and shareholding status.

The standards for rejecting business registrations would also be tightened. Applicants must not have undermined sound credit order through debt default or similar conduct during the past three years, and must not have been deemed a failing financial institution during the past five years. The head of the Financial Intelligence Unit may also reject a registration if an applicant lacks the personnel, computer systems or other facilities needed to ensure expertise and soundness in crypto-asset trading.

The revision also adds steps providers must take during crypto transfers. If a provider receives crypto assets from another virtual asset service provider without the required transfer information, it must ask the counterparty to provide that information.

The enforcement decree revision follows amendments to the Act on Reporting and Use of Certain Financial Transaction Information promulgated on Feb. 19. The revised law is scheduled to take effect on Aug. 20.