In response to a recent political scandal revolving around Kim Nam-kuk, a former member of the South Korean Democratic Party, a legalization bill is being imposed that aims to mandate South Korean officials to disclose possession of all digital assets, exceeding approximately $760 in value. The amendment to South Korea’s Public Service Ethics Act, approved by government officials, would now encompass virtual assets such as cryptocurrencies.
The South Korean legislation required officials to report holdings that surpassed 1 million Korean won (around $760) for stocks, bonds, jewellery, gifted memberships, and other assets, but digital assets did not fall under this existing purview of the South Korean legislation, indicating no disclosure needed. The proposed bill comes after the scandal, involving Kim Nam-kuk, a member of the South Korean Democratic Party, who stands accused of converting over $4.5 million into cryptocurrency last year.
A law amendment that imposed restrictions on such transactions was much sought by South Korean officials since Kim claimed he was not obliged to disclose activities circumscribing his digital assets and that he never liquidated his holdings. Kim allegedly converted approximately 800,000 Wemix coins (equivalent to $4.5 million) but instead of cashing them out, he transferred them to another exchange. Thereafter, he departed from the South Korean Democratic Party on May 15 to pursue an independent stance while preparing his defence.
In response, the South Korean government initiated the drafting of an amendment to its existing law to incorporate digital assets such as cryptocurrency in the law that mandates disclosure of other types of assets. On May 19, a subcommittee put forward and endorsed the proposed amendment. As per the document, it is scheduled to be presented for a final vote during a plenary session on May 25.
The floor leader of the country’s ruling party stated a newly proposed bill is anticipated to come into effect within the next two months. The proposed bill will mandate high-ranking South Korean officials and lawmakers to disclose their digital asset holdings.
According to a report by Yonhap News on May 23, Representative Yun Jae-ok of the People Power Party expressed the view that the scheduled date of December for introducing the new cryptocurrency declaration rules is insufficiently prompt. Yun Jae-ok also emphasized the need for further revisions to the bill and proposed the inclusion of a new clause to advance the date of enforcement before it undergoes voting.
The new bill is all set to be presented for voting on May 26. Following the collapse of Do Kwon’s Terra ecosystem in May last year South Korean officials have catapulted their efforts towards regulation of digital assets and cryptocurrencies. Newly imposed laws aim to impose more severe punishment for crypto-related crimes and include higher fines and sentences ranging from one year to life imprisonment.