The South Korean government has updated its crypto regulations, requiring companies in the crypto market to include their activities in their financial statements. According to the Financial Services Commission (FSC), the financial regulatory body in South Korea, the law will come into effect in January 2024.
The new rules require companies involved to disclose the value and characteristics of their crypto tokens, the business model, and the process used to record profit from crypto transactions. Corporations holding cryptocurrencies for investment purposes must disclose the token’s categorization, book value, and market value .
Furthermore, the FSC noted that the new rules align with the nation’s policy of fostering transparency in the crypto market, which was impacted by the collapse of the Terra project in 2022. The country’s legal system aims to establish a clearly defined process for handling crypto matters in the future.
Regarding profit declaration, corporations are not required to account for profits from digital assets until they have fulfilled their obligations to their users. South Korea also does not classify expenses used in creating digital assets and the platforms hosting them as intangible assets.
South Korea and the digital economy
South Korea is one of the countries that has begun exploration into the use of digital assets. In 2022, it announced that it will launch digital IDs on the blockchain for its citizens.
Then earlier in 2023, it started developing a digital asset roadmap, and initiated investment into the world of the metaverse. The South Korean Parliament passed its first independent digital asset bill in the last week of June to promote digital asset investment in the country.