Market News

South Korea Strengthens Crypto Regulation: Mandates Transparency for Influencers

South Korea is set to implement groundbreaking regulations targeting financial influencers in the cryptocurrency sector.

The proposed rules will require those giving investment advice on social media to disclose their own holdings and any payments received for promotions.

Spearheaded by lawmaker Kim Seon-won, these amendments to the Capital Markets Law will enhance transparency and reduce conflicts of interest.

Failure to comply may lead to penalties akin to those for market manipulation, with fines and potential criminal charges for serious breaches.

The necessity for these regulations is underscored by the dramatic increase in investment advisory service applications, which rose from 132 in 2018 to 1,724 in 2024.

As the influence of social media grows, regulators are keen to mitigate misleading claims and protect small investors.

While similar oversight is being adopted globally, questions remain regarding enforcement and the criteria for defining an influencer.

Ordinary investors could benefit from clearer disclosures, but effective enforcement will be critical in achieving the intended protection.

This move aligns with broader efforts by South Korea's Financial Supervisory Service to tighten its grip on cryptocurrency-related activities following recent market turmoil.

Ultimately, with rising stakes in the crypto space, these measures may play a pivotal role in safeguarding both investors and the integrity of the market.