South Korea Seeks to Ease Crypto Major-Shareholder Disqualification Rules
The Financial Services Commission of South Korea is proposing changes to its rules on major shareholders of virtual-asset service providers. Under current regulations, major shareholders who receive criminal penalties for legal violations can be disqualified from registration. However, the FSC plans to create exceptions that would exclude disqualification if the penalties were imposed under vicarious liability provisions or involved minor offenses.
The move is in response to industry concerns over amendments to the enforcement decree of the Act on Reporting and Use of Certain Financial Transaction Information, which take effect on August 20. The revised decree adds records of violations of certain acts to the grounds for disqualifying major shareholders of virtual-asset businesses.
The FSC also plans to revise network separation rules for financial companies that use digital technologies such as blockchain and artificial intelligence. For firms with adequate security capabilities and AI capacity, it will seek to ease or lift network separation rules through a regulatory sandbox.