A South Korean committee on Monday approved a bill requiring lawmakers to disclose their crypto holdings following a scandal involving an undisclosed investment by a senior lawmaker earlier this month.
Current legislation requires lawmakers to disclose their traditional assets, such as cash, stocks and real estate, within a month of being elected.
This is to ensure transparency while discouraging senior officials from engaging in any possible conflict of interest. But the law has previously failed to capture cryptocurrency gains.
According to local media reports, under the proposed amendment, sitting lawmakers are obliged to disclose their digital assets by the end of next month.
In South Korea, passage of a bill requires preliminary drafting by eligible parties, review by relevant committees including the Legislative and Judiciary Committees, and debate and vote in plenary sessions.
The approved bill then goes to the president for approval, and if not vetoed, it becomes law after public enactment. The bill is currently being examined by the Legislative Council for any possible conflicts with existing laws and will then be debated in plenary session.
In the U.S., the 2012 Stocks Act requires members of Congress to disclose financial assets, but does not explicitly cover cryptocurrencies. However, a 2018 consultation memo recommended that they report crypto assets in a similar manner.
In the U.K., MPs are required to disclose financial interests, including shares, under the Member Financial Interests Register, although like in the U.S., there is no specific guidance on crypto.
Lessons Learned from the South Korean Cryptocurrency Scandal
South Korea’s own legislative push stems directly from a scandal involving Democratic lawmaker Kim Nam-guk and his undisclosed millions in crypto assets.
According to the report, Kim owned the tokens of the gaming company Wemade in 2021, which were worth about $4.5 million at the time. This led to an investigation by his party into his conduct before he finally decided to quit.
Kim may have liquidated all his crypto holdings before South Korea implements the travel rule in March 2022. The rule requires all cryptocurrency exchanges in the country to report transactions of more than 1 million won (about $757) and to identify the entities behind those transactions.
While the controversy centered on the fact that Kim reportedly emptied his digital wallet before the rules went into effect, he also came under fire for another related but related matter.
Kim’s July 2021 co-sponsorship of a bill arguing for a tax delay on digital assets has drawn attention because it happened about half a year before he liquidated his Wemade tokens.
The lawmaker has publicly dismissed the allegations and said he will pursue legal action against media companies for their false reporting.
In a Facebook post earlier this month, Kim Jong-un apologized to his party members, saying he would “confront unfair political attacks and reveal the truth” as an independent member of Congress.
“Over the past week, media reports based on false facts have emerged,” Kim said, according to a rough translation of the post. “I will be away from our Democratic Party for a while, but I will always be with and with the Democratic Party.”
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