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 formulation of virtual asset accounting and auditing standards to protect market investors.

FSS explained that it will hold the first expert meeting on the 28th to discuss accounting supervision issues related to virtual assets with the Korea Accounting Standards Institute and Korean Certified Public Accountants and discuss relevant plans.

FSS said that as virtual assets are used in emerging industries, various transactions such as brokerage and issuance are taking place, but no specific accounting standards have been clarified. 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 Korean virtual asset market is 55.2 trillion won, and the average daily trading volume is 11.3 trillion won.

The Financial Supervisory Service regularly organizes expert meetings composed of experts from accounting-related institutions to discuss accounting issues. There are a total of 10 members, consisting of experts from the Korea 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 for virtual assets and the task of strengthening annotation disclosure to protect investors, and will discuss whether to disclose relevant information such as the issuance and (pre-) sale of virtual assets, holdings, and client-entrusted virtual assets.

At its next meeting, the Financial Supervisory Service will hear questions from the Korea Accounting Standards Authority and the Institute of Certified Public Accountants, which set accounting and auditing standards, respectively, and then hear opinions from the virtual asset industry, accounting firms, and academia. After that, if guidelines are needed, the Financial Supervisory Service plans to promote relevant seminars after consulting with the Financial Services Commission.

A Financial Supervisory Service official said, “We will proactively identify problems in the field of accounting supervision before the Virtual Business Rights Act is enacted and propose relevant guidelines when necessary, thereby contributing to investor protection.”

Not only South Korea, but also Singapore's international standard-setting bodies and regulators are conducting reviews and public consultations on issues such as consumer protection, market conduct and reserve support for stablecoins in the crypto market.

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 prohibiting downplaying the risks of cryptocurrency trading. The MAS has been seriously considering introducing more consumer protection measures, which may include restrictions on retail participation and rules on the use of leverage when trading cryptocurrencies.