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South Korea: Financial regulator wants staff to disclose digital currency holdings

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South Korea’s Financial Services Commission (FSC) has announced its intent to revise its code of conduct for employees regarding the disclosure of digital currencies amid a nationwide effort to sanitize the industry.

In a July 4 notice, the FSC stated that the reason for the revision flows from the request of the country’s Anti-Corruption and Civil Rights Commission. In order to comply with the directive, the FSC says it will be adding provisions for the Specified Financial Information Act to its code of conduct.

The staff of the FSC will be expected to publicly disclose their digital currency holdings. The revision appears to have a retroactive flavor as officials that have performed duties linked to digital assets in the last six months are expected to make relevant disclosures.

The duties include drafting laws relating to digital assets and extending to the investigation, reporting, management, and technology development support of digital currencies. Affected officials are expected to make the disclosures by filling in the form contained in the updated code of conduct.

Members of the public are encouraged to air their opinions on the amendment via email to the FSC before August 14.

South Korea’s digital currency industry has been plagued with several scandals involving insider trading and conflicts of interest. Things were heated when it was discovered that Korean lawmaker Kim Nam-kuk may have netted illegal profits using insider knowledge.

Kim was accused of using his position as a House Committee on Digital Assets member to postpone the application of a new tax regime while using the asset class to conceal illicit funds.

“This is a serious moral hazard,” said Daegu Mayor Hong Joon-pyo. “He appeared to have had a get-rich-quick-scheme with crypto trading. He should have left his job as a lawmaker and focused on speculative trading instead.”

Sanitizing the ecosystem

In a bold bid to restore public confidence, South Korean lawmakers proposed a bill requiring all public officials to disclose their digital currency holdings in May.

At that time, the rules only required officials to disclose cash and stocks in excess of $7,572, but scathing allegations of violations of anti-money laundering (AML) rules have forced the hand of regulators.

In 2018, the U.S. House of Representatives Committee on Ethics ordered all members to disclose their digital currency holdings to avoid issues bordering on conflict of interest.

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