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- The reforms aim to enhance accounting transparency.
- A significant number of global cryptocurrency investors are South Korean.
To enhance market transparency, the Financial Services Commission (FSC) of South Korea has mandated that starting in 2024, cryptocurrency firms that issue or hold cryptocurrencies must include specific crypto disclosures in their financial reports.
The new legislation requires cryptocurrency companies to reveal their coin’s revenues, trading volume, and market capitalization, along with the quantity, characteristics, operational methods, and accounting practices related to the sale of virtual currencies.
Enhancing Accounting Transparency
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The FSC made its announcement regarding the proposed guidelines on July 1, following the approval of the Virtual Asset User Protection Act on June 30. Additionally, the reforms are designed to enhance accounting transparency.
Previously, businesses and their auditors debated the timing and criteria for determining whether the sale of virtual assets to customers constituted profit. Under these regulations, the sale of any virtual assets will be recorded as a gain once a firm has met its obligations to its holders.
Moreover, data aggregator Xangle indicates that a significant number of global cryptocurrency investors are South Korean. In 2022, the Korean won ranked as the third most utilized currency for purchasing crypto worldwide, following the US dollar and the Japanese yen.
Furthermore, the nation is frequently viewed as Asia’s cryptocurrency hub. Estimates suggest that the Korean market accounts for nearly 30% of all global crypto trading.
Last month, South Korea’s parliament enacted the Virtual Asset Protection Act to address market manipulation and curb insider trading. Additionally, the FSC notes that this regulation has prompted further changes to digital asset accounting practices.
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