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- South Korea targets crypto influencers with strict disclosure rules
- New bill mandates asset and payment transparency online
- Lawmakers push tougher penalties for misleading promotions
South Korea’s ruling party has introduced a bill to tighten oversight of cryptocurrency promotion on social media platforms. The targeted group in the proposed law comprises financial influencers who regularly post investment opinions and recommendations to large online audiences.
The amendments aim to update the Capital Markets Act and the Virtual Asset User Protection Act. A report by Herald Business states that Democratic Party lawmaker Kim Seung-won proposed increasing investor protections. The project focuses on enhancing transparency in online comments about digital assets.
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Mandatory Disclosure of Holdings and Paid Promotions
Influencers who advertise cryptocurrencies under the bill would be required to disclose their personal assets. They would also be obliged to disclose any form of compensation that they get to publish investment-related material. This would also be disclosed by those individuals who provide advice via social media, broadcasts, and other mass publications.
Additional reporting standards would be more detailed, and the future presidential decree would determine them. According to the lawmakers, the punishment for infractions would be comparable to that for current capital market crimes. Those steps comprise penalties for price manipulation and front-running.
Kim has highlighted the growing concerns about conflicts of interest in the online investment sector. He said that there are influencers who spread false information, even though they have undisclosed stakes in the same assets. This acting, according to him, is detrimental to retail investors who use social media commentary to guide their decision-making in the trading industry.
Global Enforcement Trends Shape Policy Direction
The proposed bill reflects international efforts to regulate financial promotion in the digital asset industry. The Financial Conduct Authority in the United Kingdom limits financial promotions to authorized persons and, in 2023, created crypto-specific advertising rules.
In the meantime, the United States Securities and Exchange Commission has penalized various celebrities and influencers for promoting digital assets without the required disclosure of payments. This has been underscored by high-profile enforcement actions that have strengthened regulatory oversight of undisclosed endorsements.
Investigative activities are underway to improve control of the domestic cryptocurrency market, and legislators will now review the legislation in South Korea.
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