Key learning points
South Korean MP Yoon Chang-hyun is proposing an amendment to scrutinize the criminal records of major shareholders in crypto companies.
The Financial Intelligence Unit (FIU) also focuses on the suitability of major shareholders.
The amendment aims to bring transparency and regulatory compliance to the crypto market.
Legislative intent
On September 15, Yoon Chang-hyun, a lawmaker from the People Power Party, proposed an amendment to the Special Financial Information Law (특금법). The amendment aims to scrutinize not only CEOs and registered executives, but also the criminal records of major shareholders during the application and assessment process for crypto companies, according to decency.
Regulatory focus
The Financial Intelligence Unit (FIU) has also formed a Task Force (TF) to review crypto exchange reporting requirements and will focus on the eligibility of large shareholders. An official from Yoon Chang-hyun’s office stated, “We have consulted the financial authorities and submitted the bill.”
Legal risks and implications
The proposal comes against the backdrop of legal risks involving major shareholders in crypto exchanges. For example, Song Chi-hyung, the chairman of Dunamu (operator of Upbit), is awaiting trial in the Supreme Court on charges of creating fake accounts and manipulating transactions. Similarly, Lee Sang-jun, the CEO of Bithumb Holdings, is under investigation for receiving “listing fees” from Kang Jong-hyun, who is suspected of being the real owner of Bithumb.
Compliance Requirements
If the amendment is adopted, existing crypto companies will have to report details of their major shareholders within three months. Those found guilty after enactment will likely be disqualified during the review process. The law will not apply retroactively, but will require crypto companies to renew their reporting every three years.
Conclusion
The proposed amendment reflects the legislator’s intention to integrate the often volatile crypto market into the regulatory framework. The focus on the suitability of major shareholders aims to achieve a level of transparency and reliability comparable to traditional financial markets.
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