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South Korean Lawmakers Pass Law Requiring Officials to Reveal Crypto Holdings

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Lawmakers in South Korea today passed a legislation that requires high-level government officials to report their crypto holdings, starting next year. The ‘Kim Nam-kuk Prevention Act' got approval in a plenary session of the National Assembly on Thursday via amendments to the Public Service Ethics Act and National Assembly Act which were approved unanimously.

The amendment to the latter Act attracted no dissenting vote from 269 lawmakers while changes to the Public Service Ethics Act saw support from all 268 lawmakers who participated. The Public Service Ethics Act previously required officials to disclose assets they own such as like stocks and bonds worth over 10 million Korean won ($7,572) but didn’t impose the same provision on virtual assets. In line with the latest legal tweaks, cryptocurrency holdings will now be subject to reporting under the private interests which top-ranking public officials need to disclose.

Grounds for the bill mandating crypto disclosure

In a bid to address loopholes in existing legislation and ensure transparency, South Korea lawmakers set out to work on a proposal amending the Public Service Ethics Act. The change specifically expands the Act's scope to mandate disclosure of crypto holdings by government officials. Given the significant public interest surrounding lawmaker involvement with crypto, there have been calls to expedite the implementation of the disclosure requirements proposed in the amendments.

The country's ruling party, People Power Party (PPP), earlier this week set in motion efforts to expedite the bill seeking disclosures on cryptocurrencies which was initially meant to go into effect in December according to a May 23 report by a local news outlet.  The parliamentary floor leader of the ruling People Power Party, Rep. Yun Jae-ok, requested the chair of the Public Administration Committee that the bill be modified to accommodate changes. Yun, who was elected floor leader in the opposition-controlled National Assembly in April, asked that the bill's enforcement date be brought forward to within one or two months.

“Given the current high level of public interest, especially regarding lawmakers, it's not appropriate to enforce the law six months later after the promulgation,” the three-term lawmaker advised.

The move comes in response to recent scandals involving government officials, including Rep. Kim Nam-kuk, a former member of the Democratic Party of Korea (DP). Kim allegedly cashed out significant amounts of crypto prior to a specific related rule change. The independent lawmaker, who previously camped in the opposition, was reported to prosecutors after the Financial Services Commission's Financial Intelligence Unit flagged a series of withdrawal between late February to early Mar in 2022 as suspicious.

The first-term lawmaker apparently held over $4.5 million in crypto between Jan and Feb 2022 inconsistent with his image but denied violation of any laws, saying he transferred his holdings to another exchange. Kim who is currently under investigation by the prosecutor's office reportedly co-sponsored a previous provision to defer taxation on virtual assets. Last week, the DP leadership led by party leader Lee Jae-myung and spokesman Rep. Park Sung-joon resolved to refer Kim to the Special Committee on Ethics amid concerns that the lawmaker could try to avoid questioning on his odd crypto dealings.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.