‘The Kim Nam-guk Prevention Law mandates officials to report their holdings of cryptocurrencies like Bitcoin.‘
South Korea has taken a significant step in regulating cryptocurrency by passing a bill that mandates lawmakers and high-ranking public officials to disclose their crypto assets.
The bill, known as the “Kim Nam-guk Prevention Law,” is a response to a recent scandal involving National Assembly members engaging in substantial crypto transactions.
Mandatory Disclosure of Crypto Assets
During a plenary session on May 25, South Korea’s National Assembly unanimously approved the bill.
The legislation involved amendments to the National Assembly Act. It also included amendments to the Public Service Ethics Act, both of which received overwhelming support.
The amendment to the National Assembly Act was passed on the 22nd of May. It officially includes cryptocurrency in the list of registered properties held by lawmakers.
On the other hand, the amendment to the Public Officials Ethics Act mandates high-ranking public officials to disclose their cryptocurrency assets. It also applies to National Assembly members.
Background: The Crypto Scandal
The motivation behind these new legal developments stems from a major scandal. The scandal involves certain National Assembly members and their significant cryptocurrency transactions. Kim Nam-kuk, a former member of the main opposition Democratic Party, was found to have possessed at least $4.5 million in crypto assets at the Wemix exchange.
The revelation of Kim Nam-kuk’s crypto holdings immediately raised concerns about potential money laundering, conflicts of interest, and the misuse of insider information.
To address the issue swiftly, the South Korean government initiated the “Kim Nam-guk Prevention Law”. This is to ensure greater transparency and accountability regarding crypto assets.
Inclusion of Crypto in Wealth Reporting
The primary objective of the “Kim Nam-guk Prevention Law” is to incorporate all crypto holdings exceeding $760 into the wealth reporting of senior officials. This change treats cryptocurrencies on par with cash, stocks, bonds, gold, and other assets.
By doing so, the government aims to prevent illicit activities and ensure the integrity of public officials’ financial dealings.
Timeline for Implementation of Kim Nam-guk Prevention Law
Initially, the new legislation was set to take effect in December 2023, following a six-month grace period. However, representative Yun Jae-ok of the People Power Party and others have urged for an earlier enforcement of the bill. They propose a July implementation.
With the passage of the bill, South Korea has taken a significant step in regulating cryptocurrency within its borders. The requirement for officials to disclose their crypto holdings aims to enhance transparency and combat potential financial misconduct.
The South Korean government aims to address the concerns raised by the recent scandal. This is part of their efforts to promote integrity and accountability among public officials.
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