With the ongoing changes in the crypto ecosystem, global financial regulators have stepped up their game to address exploitative business activities. In an advanced report dated February 5, the Financial Services Commission (FSC) in South Korea shared a series of proposals that will restore customers’ confidence in the crypto industry.
Citing the legal charges facing top-level executives in the crypto sector, the financial regulators proposed changes in the hiring process.
South Korean FSC Proposes New Rules
The report demonstrated that the candidate must meet the regulatory requirements before joining a crypto firm. The proposed requirement will mandate the FSC to conduct background checks on the new executive before the initial recruitment.
This implies that a company seeking a leadership transition must report the changes in management to the FSC. The new provision mandates crypto executives to exercise a desirable code of conduct that attracts success.
After attaining the desired career objective, most crypto executives occasionally opt to quit employment to create their ventures. Driven by the desire to achieve personal goals, crypto executives leaving their permanent jobs to run new ventures has exposed the digital sector to fierce competition and non-compliance with the law.
Therefore, if the new rules take effect, the crypto executives must undergo a thorough regulatory assessment before creating their new jobs. According to Money Today, a South Korean-based outlet, the new provision is expected to be effective by the end of next month.
Overview of FSC Rule-Making Process
Before then, the FSC will submit the proposed rule to different regulatory agencies to examine the possibility of implementing the new rules. Firstly, the FSC will submit the proposal to the Ministry of Government Legislation for review.
The comments from the ministry will guide the FSC in its final resolution concerning the new rules. Then FSC will revise the new rules accordingly before the expected implementation. The report indicated that virtual asset service providers (VASPs) must update their report if the rule takes effect in March.
Not only did the new rule interfere with the hiring process, but the report demonstrated that the proposed regulation will extend to VASP licensing. According to the announcement, if the new rules take effect, VASP will be required to comply with the new provision to renew their licenses.
Global Regulators Seeks to Regulate Crypto Industry
Primarily, the new rules grant the FSC legal authority to terminate a license if an official working for VASP is facing legal charges. Under the new regulations, the FSC will be allowed to collaborate with local and international law enforcement units to investigate the conduct of crypto executives.
In the meantime, the FSC urges the public to issue feedback concerning the new rules before March 4. The new provision demonstrated that the South Korean government seeks to regulate digital assets entirely.
Elsewhere, a local news outlet, Decenter, stated that South Korea’s Financial Intelligence Unit (FIU) was holding intense discussions concerning regulating crypto mixers.
The Decenter team noted that regulatory endeavours to supervise the operation of crypto assets aim to protect the customers from financial losses. Based on the asymmetrical price swing, crypto has been profiled among the risky investments.
In the United States, the regulators have been mulling regulation for crypto mixers following its involvement in money laundering. The US regulators claimed that crypto mixers have become a hiding place for criminals to launder stolen assets.