In response to the “Coin Gate” scandal, South Korea’s leading financial regulator has introduced stringent measures. The Financial Services Commission (FSC) now mandates employees to disclose their cryptocurrency holdings. The scandal implicated lawmakers in alleged insider trading, triggering widespread demands for increased transparency.
The accused lawmakers reportedly offloaded tokens ahead of the implementation of new crypto regulations. Adding fuel to the controversy, one of the lawmakers was concurrently serving on a parliamentary subcommittee dedicated to crypto-related matters.
This scandal has led to renewed emphasis on transparency, not just among lawmakers, but also regulators and public officials. The FSC, which oversees the South Korean crypto industry and performs due diligence on domestic crypto exchanges, has now updated its employee Code of Conduct.
The updated code has laid down new rules. Employees engaged with “virtual assets” are prohibited from trading cryptocurrencies based on undisclosed information acquired during their professional duties. Furthermore, employees who hold tokens must report this to the FSC.
To ensure compliance with the new guidelines, employees must complete a form named the “Report on the Possession of Virtual Assets”. This form requires employees to declare the type, date of acquisition, and quantity of the virtual assets they hold.
South Korean regulations
The new rules apply not only to public officials currently handling virtual asset-related tasks, but also to those who did so within the last six months.
Although legislative changes are needed for the FSC to enforce the new code, efforts are being made to fast-track the process. The goal is to complete this process within the second half of the current year. South Korea, alongside Japan, is often viewed as a pioneer in crypto regulation, setting a precedent that other countries may follow.
It’s worth noting that Ukraine has already enacted laws mandating incumbent MPs to disclose all assets, including cryptocurrency holdings. This disclosure has previously led to public outrage due to the vast quantities of tokens owned by Ukrainian lawmakers. This has led to questions about the origins of these significant crypto reserves.
The “Coin Gate” scandal continues to ripple through South Korea as its financial regulator now requires employees to declare their crypto holdings. This updated code of conduct prevents staff from trading cryptocurrencies using undisclosed work-derived information. Moreover, employees who own crypto assets must report them to the FSC. The FSC aims to expedite necessary legislative changes to enforce the new code, with completion targeted for later this year.