Rule

Financial authorities in South Korea intend to initiate stringent eligibility reviews for major shareholders of cryptocurrency exchanges, mirroring the standards upheld within the banking sector, local media <a href="https://newsis.com/view/?id=NISX20230921_0002460005" rel="noopener noreferrer nofollow">reported</a> on Sept. 22. 
The move comes amid increasing legal turmoil involving shareholders of prominent domestic exchanges such as Bithumb and Upbit. 
<h2 id="rule-reform">Rule reform</h2> 
The Financial Intelligence Unit (FIU) under the Financial Services Commission has assembled a task force to reform coin exchange reporting requirements. This revised mandate will be integrated into the coin exchange renewal reporting items for implementation in Oct. 2024. It will serve as a cornerstone for future operations of existing exchanges in the country. 
According to the Enforcement Decree of the Specific Financial Information Act, all virtual asset business operators, including exchanges, must file a renewal report every three years post initial report acceptance. This process will recommence in Oct. 2024, beginning with Upbit, which finalized the inaugural report acceptance in Oct. 2021. 
The task force will primarily concentrate on scrutinizing major shareholder eligibility, a procedural safeguard allowing the government to periodically assess whether the majority shareholder retains the qualifications requisite to operate a financial enterprise. 
The initiative by FIU aims to curb illicit activities by major shareholders who wield significant influence over the coin exchange businesses and to mitigate user damage. 
Previously, major shareholders operated in a regulatory grey area, with current legislation under the Special Financial Services Act mandating only exchange representatives and registered executives to report and undergo review when declaring a virtual asset business. 
<h2 id="lawmakers-want-heightened-scrutiny">Lawmakers want heightened scrutiny.</h2> 
According to media reports, the involvement of major shareholders of domestic exchanges in fraudulent and market-manipulative activities has spurred the examination of major shareholders. 
The two most prominent cases involve major Bithumb shareholder Jong-hyun Kang, who is embroiled in a <a href="https://cryptoslate.com/south-korean-authority-arrests-bithumb-owner-over-50-million-embezzlement-charges/" rel="noopener noreferrer nofollow">primary criminal trial</a> for alleged fraudulent trading, and <a href="https://cryptoslate.com/upbits-parent-company-dunamu-sees-profit-drop-76-in-q3/" rel="noopener noreferrer nofollow">Dunamu</a> Chairman Song Chi-hyung, the predominant shareholder of Upbit, who is currently facing a Supreme Court trial for purported market manipulation. 
Representative Yoon Chang-hyeon of the People Power Party has proposed a legislative amendment to the Special Financial Services Act, advocating for incorporating a review system for major shareholders of virtual asset business operators. 
The amendment dictates that virtual asset business operators, including coin exchanges, must report information pertinent to major shareholders, enabling the FIU to examine the company’s primary shareholders’ economic and financial crime history. 
The post <a rel="noopener noreferrer nofollow" href="https://cryptoslate.com/south-korea-to-screen-major-shareholders-of-crypto-exchanges-over-eligibility-concerns/">South Korea to screen major shareholders of crypto exchanges over eligibility concerns</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://cryptoslate.com">CryptoSlate</a>.

South Korea to screen major shareholders of crypto exchanges over eligibility concerns

Table of Contents

CryptoSlate

Other articles published on Sep 25, 2023

Chainlink addresses controversy over multisig wallet signer changes

Bybit Halts UK Operations in Response to FCA Regulations

Grayscale Bitcoin Trust Turns 10, Announces Rebranding

Hong Kong to Reveal List of Crypto License Applicants in the Wake of JPEX Scandal

SFC to Release Comprehensive List of Unregulated Crypto Platforms

Everlodge Meteoric Rise: 85 Million Tokens Gone, Leaving XRP and DOT Holders in Awe

Join our free newsletter for daily crypto updates!