South Korea is introducing a new crypto bill which will require companies that own or issue cryptocurrencies to disclose their holdings in financial statements. The country’s financial regulator released a draft on Tuesday, and if approved, companies that hold cryptocurrencies would need to comply with these rules starting in 2024.
Key Takeaways:
– South Korean financial regulator wants companies to disclose their crypto assets in their financial statements.
– The aim is to improve accounting transparency amongst companies operating in the country.
The new rules stipulate that companies must provide investors with information regarding the quantity, characteristics, business models and accounting policies concerning the sale of cryptocurrencies. Additionally, companies will need to disclose profits, volume and market value of their crypto.
The Financial Services Commission (FSC) said this is being done to improve accounting transparency following the passing of the Virtual Asset User Protection Act last month. This bill also clarified the criteria for determining when the sale of cryptocurrencies to customers is regarded as profit.
Previously, companies and auditors disagreed on the timing and criteria for determining profit. The new rules state that if companies sell cryptocurrencies and other virtual assets, the sales would be recognised as profit after the company fulfills obligations to its holders.
Moreover, the FSC stated that costs incurred while developing virtual assets and platforms would not be classified as intangible assets.
South Korea has a clear set of cryptocurrency regulations, with the National Assembly approving a bill in May that requires government officials to disclose their crypto holdings. This bill requires officials to declare all crypto holdings of $760 or more, with the same disclosure requirement already in place for cash, stocks, and bonds.
