According to the FSC, the main aim of the proposed new rules is to encourage firms to have accounting transparency.
Beginning next year, crypto firms in South Korea will be required to declare their crypto asset holdings in their financial statements. This is according to draft rules released by the country’s financial regulator, the Financial Services Commission (FSC), on July 11.
The new rules seek to know every little detail about crypto firms. That includes a company’s business model, its accounting policies, the quantity of crypto it holds, profits made, and the market value of its holdings.
South Korea Prioritizes Accounting Transparency
According to the FSC, the main aim of the proposed new rules is to encourage firms to have accounting transparency. The financial regulator believes that the new rules will usher in an era when companies will no longer hold differing opinions from those of their auditors. That is when it comes to admitting whether the company is in profit or not.
For instance, the rule provides that if a company sells virtual assets, profits will only be calculated after the company must have settled its holders.
Furthermore, the new rules also seek to ensure that costs incurred in developing virtual assets and their platforms will not be classified as intangible assets.
Although audit procedure guidelines are currently being prepared, South Korea has been keen on transparency. Its previous efforts include setting up a discussion panel that consists of domestic accounting experts and three agencies – the Financial Services Commission, the Financial Supervisory Service, and the Accounting Standards Board.
Over the past year, this panel has severally discussed accounting uncertainties, and so the new rules represent a step in the right direction for the country, which has its eyes ultimately set on protecting investors by all means necessary.
Interestingly, the draft rules follow the Virtual Asset User Protection Act which, also, was just recently passed on June 30.