South Korea moves towards transparency in cryptocurrency use by public officials, passing Kim Nam-guk Prevention Law.
The South Korean National Assembly has taken a significant step towards transparency in the use of cryptocurrencies by public officials. This week, the South Korean parliament unanimously passed a law requiring officials to declare their cryptocurrency holdings. This move, known as the “Kim Nam-guk Prevention Law,” is a direct response to a recent scandal involving various lawmakers and their activities with digital currencies.
The scandal that led to the creation of this law involves Kim Nam-guk, a former lawmaker accused of moving large sums of money through cryptocurrencies. The ongoing investigation seeks to determine whether Kim received cryptocurrency for free or at a discount and whether he used his position to obtain these assets. Now, with the passage of the law, all officials are required to declare any cryptocurrency holdings.
South Korean Officials and Cryptocurrency: A New Standard of Accountability
The new law sets an important precedent for accountability and transparency in the South Korean cryptocurrency market. Officials, from members of the National Assembly to high public officials, must adhere to this law.
With the unanimous approval of the amendments to the National Assembly Act and the Public Service Ethics Act, civil servants are required to declare their cryptocurrency holdings.
The measure seeks to include cryptocurrencies within the declarations that public officials must make with assets such as cash, shares, and real estate, only if they exceed KWR $10 million (approximately USD $7,500).
Benefits of the Cryptocurrency Declaration Law
This law has several advantages. First, it helps prevent corruption by preventing officials from hiding funds in digital assets. Furthermore, it ensures that officials do not use their positions to manipulate the cryptocurrency market.
Lastly, it recognizes the growing importance of cryptocurrencies in the global economy. As cryptocurrencies become more common, regulations like this become more and more necessary.
The Context behind the Law
Former National Assembly member Kim Nam-guk was at the center of a scandal when he was found to have $4.5 million worth of cryptocurrency in an account on the Wemix exchange.
The case is even more serious, as Nam-guk participated in debates and resolutions that postponed the entry into force of certain cryptocurrency-related laws. Such was the case of the proposal to establish a 20% tax on earnings with digital currencies, which was delayed until 2025 after a vote by the members of the Assembly.
Despite all this, Nam-guk claimed that his cryptocurrency investments and actions towards certain laws related to such assets did not constitute conflicts of interest:
“I did not borrow or receive money from anyone (for cryptocurrency trading). I sold some of my assets to use for the initial crypto investment. I have also transacted only through real name accounts and can transparently share all transaction records.”
However, personalities from the local political scene strongly rejected Nam-guk’s position and argued that this situation reveals important ethical and moral conflicts for the position he assumed since the delay of certain laws has greatly benefited him on a personal level.
Regarding this bill, now that it has been approved by the local Assembly, all that remains is to wait for the president to sign it for it to enter into force. If this happens, South Korea would lead nations like the US and the UK in requiring their public officials to declare their cryptocurrency holdings.
By Audy Castaneda