South Korea Proposes Stricter Regulations for Crypto Executives, Seeking FSC Approval

On Monday, South Korea's Financial Services Commission (FSC) introduced new proposals aiming to require regulatory approval for incoming executives in cryptocurrency companies. This move potentially grants increased authority to the financial regulatory body within the local crypto sector.

The FSC's announcement states its intention to address existing challenges in the current legislation overseeing the domestic crypto industry. Should these amendments be implemented, prospective executives in South Korean crypto firms will be obliged to await FSC approval before assuming their roles. This requirement, not presently outlined in the country's laws governing financial transaction information use and reporting, represents a notable shift.

The proposed amendments are slated for further scrutiny by the Ministry of Government Legislation and a subsequent voting process by the FSC. If all goes as planned, these changes are expected to be enacted by the end of March, as reported by local news outlet Money Today.

Additionally, the amendments propose giving the FSC the authority to halt the review of a crypto company's license registration in cases where the company or its members are under investigation by either local or international regulators.

Furthermore, the FSC could potentially revoke a company's registration if it violates the Act on Corporate Governance of Financial Companies through the improper election of an executive. Notably, individuals who have been sentenced to a fine or more severe penalties for any crime and have not completed five years since the execution of their sentence would be barred from assuming executive roles in a crypto firm. 

Recent reports indicate that Binance is exploring options to reduce its stake in South Korean exchange Gopax, where it presently holds the largest shareholder position. This move is aimed at addressing concerns raised by the FSC. The regulatory body has delayed approving Gopax's structural change following Binance's acquisition, possibly due to Binance's legal challenges in the U.S.

The FSC is actively seeking public feedback on these proposed amendments until March 4. As of now, the regulator has not responded immediately to requests for further comments from The Block.