Singapore, South Korea to enact regulations to protect crypto market investors

South Korea’s Financial Supervisory Service (FSS) announced on the 27th that it will discuss the preparation of virtual asset accounting and auditing standards to protect market investors.

FSS explained that the first expert meeting will be held on the 28th to discuss accounting supervision issues related to virtual assets with the Korean Accounting Standards Institute and Korean certified public accountants, and discuss related plans.

Various transactions such as brokerage and issuance are taking place as virtual assets are used in emerging industries, the FSS said, but no specific accounting standards were specified. In addition, due to the lack of understanding of the characteristics of virtual assets by external auditors, there are many difficulties in auditing. It is reported that the size of the South Korean virtual asset market is 55.2 trillion won, and the average daily transaction volume is 11.3 trillion won.

The Financial Supervisory Authority regularly organizes expert meetings composed of experts from accounting-related institutions to discuss accounting issues. There are 10 members in total, consisting of experts from the Korean Accounting Standards Institute, the Institute of Certified Public Accountants, the virtual asset industry, academia and accounting firms.

The first meeting will focus on the current status of accounting treatment of virtual assets and the task of strengthening annotation disclosure to protect investors, and discuss whether to disclose the issuance and (pre-)sale of virtual assets, positions, virtual assets entrusted by customers and other related information.

At the next meeting, the Financial Supervisory Authority will hear relevant issues from the Korea Accounting Standards Agency and the Institute of Certified Public Accountants, which set accounting and auditing standards respectively, and then hear from the virtual asset industry, accounting firms and academia. Afterwards, if guidelines are needed, the FSA plans to facilitate relevant workshops in consultation with the Financial Services Commission.

The relevant person in charge of the Financial Supervisory Service said: “We will preemptively identify problems in the field of accounting supervision before the enactment of the “Virtual Business Rights Law” and propose relevant guidelines if necessary, thereby contributing to the protection of investors.”

Not only South Korea, but Singapore’s international standard-setting bodies and regulators are reviewing and openly negotiating issues such as consumer protections in the crypto market, market conduct, and reserve support for stablecoins.

Since January, the MAS has gone further than most other regulators, including restricting the marketing and advertising of cryptocurrency services in the public domain and banning downplaying the risks of cryptocurrency trading. The Monetary Authority of Singapore has been seriously considering introducing more consumer protections, which could include restrictions on retail investor participation and rules on the use of leverage when trading cryptocurrencies.

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