Crypto Regulation: South Korea Moves to Regulate Influencers With Disclosure Rules

Key Insights

• In the latest crypto regulation news, South Korea’s ruling party proposed mandatory asset disclosures for finfluencers.
• The bill would amend the Capital Markets Act and Virtual Asset User Protection Act.
• Violations could face penalties aligned with capital market offenses.

South Korea is tightening its regulations on social media promotion of crypto. A measure was introduced on February 25 by members of the ruling Democratic Party.

Influencers would be compelled to reveal any crypto holdings and sponsored campaigns as a result. So-called “influencers” are the focus of the proposal—people who frequently offer investment advice online.

According to officials, the objective is straightforward: safeguard individual investors in one of the most active cryptocurrency marketplaces globally. Regulators aim to lessen hidden conflicts of interest by enforcing transparency. Additionally, curb pump-and-dump manipulation is exposed.

South Korea Tightens Crypto Regulation

According to Herald Business, Kim Seung-won, a Democratic Party politician and member of the National Policy Committee, has proposed modifications to the Capital Markets Act and the Virtual Asset User Protection Act.

The crypto regulation update, which aims to improve transparency for investors, targets individuals who habitually provide investment advice or recommendations on cryptocurrency and other assets via social media, mass publications, or broadcasts, according to the report.

Influencers are now obliged to disclose any monetary payment they get in exchange of particular token endorsements. In addition, they should report their personal interest in the assets that they suggest.

This openness ensures that retail investors know the ulterior motives behind viral investment advice. It is therefore expected that South Korean crypto regulations will revise how projects approach local marketing.

Crypto Regulation: Legal Teeth and the Virtual Asset Act

The ruling party formulated this crypto regulation bill with a lot of enforcement mechanisms in mind. Violators will be subject to penalties similar to those in traditional securities fraud.

This is a strong indication of the legality of the Virtual Asset Act in the area. The government can fine or even sentence offenders to prison for deceptive promotional practices, as per the crypto regulation update.

In this manner, the government will consider misinformation about digital assets a serious capital market crime. Such stringent control over South Korea’s activities is an indication that the days of the Wild West are over in the hands of local influencers.

Market Analysis: Professional Sentiment Shifts

Caution and long-term hope were the reactions of the crypto market to this news. First, there was a slight liquidity crunch in some local altcoins as traders expected a slowdown in promotional efforts.

Other observers think that such transparency will, in the short term, dampen the retail FOMO (Fear Of Missing Out).

Bitcoin is currently trading at $66,118, up by 3.17% in the past 24 hours. Bitcoin rebounded to over $65K after tagging $62,525 support. However, the structure remains fragile after hitting the lowest weekly RSI (25) in history, extremely oversold.

Crypto Market Keeps Track of Bitcoin Price Chart | Source: TradingView

But institutional players see the South Korean crypto regulation as one of the good signs of maturing. Greater supervision will tend to result in greater institutional confidence and enhanced market integrity.

The prevailing view among experts is that the Asset holdings requirement will filter out bad projects. Thus, a transition to a fundamental-driven valuation is being priced in by the market today.

Future Implications for South Korea Regulation

South Korea is still one of the most dynamic digital asset trading platforms in the world. Hence, the crypto regulation will likely become a global standard for influencer accountability.

The Virtual Asset Act is kept on changing to address the new technological challenges. Critics fear that the heavy regulation may make the blockchain space less creative in content.

On the other side of the debate, proponents claim that investor protection should be prioritized over unregulated marketing.

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