S. Korea proposes FSC inspection of crypto execs before employment

South Korea's financial regulator has proposed reforms that require executives of new crypto projects to obtain regulatory approval before starting work in crypto companies.

In the year The proposal aims to give the FSC the power to investigate executives joining crypto companies. If passed, the law would force crypto companies to report employee changes to the financial regulator. Thus, executives cannot begin their work until the FSC approves their employee turnover report.

Local news outlet Money Today expects the reform to take effect by the end of March 2024 after the reform has gone through several processes, including a review of the government ministry's law and a decision by the FSC. Once the rule is revised, the rules will apply to VASP renewal reports due in the second half of 2024.

Additionally, the proposed rules would affect companies' ability to renew their VASP licenses. The amendments are intended to give the FSC the power to suspend the review of VASP license applications if domestic or international authorities are investigating their employees.

South Korea's regulator is asking for public opinion on the proposed amendment. The public has until March 4 to comment on the proposal.

Related: Hong Kong regulator says unlicensed VASPs must stop working in May

South Korean regulators have been moving to introduce stricter regulations for the crypto space in the country. On January 15, local outlet Decenter reported that South Korea's Financial Intelligence Unit is working on legislation regarding crypto mixers. The regulator aims to introduce regulators similar to those in the United States on the growing use of cryptocurrencies for money laundering.

In early January, the FSC expressed concerns about illegal withdrawals and money laundering that could occur when South Koreans buy cryptocurrencies with foreign currencies. On January 3, the regulator published a legislative notice proposing changes to its credit finance laws that would prohibit local residents from buying crypto with credit cards.

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