Companies to publicly disclose crypto assets from 2024

Physical imitations of cryptocurrency [YONHAP/AFP]

Companies that hold or issue crypto assets will be required to publicly disclose the related details starting next year.

The Financial Services Commission and the Financial Supervisory Service on Tuesday released a set of guidelines for crypto asset accounting and disclosure to raise the transparency of companies that issue or possess crypto assets.

The guideline follows the passage of a crypto bill in late June to raise user protection.

The legislation, due to take effect next year, was passed by the National Assembly, marking the country’s first step towards establishing a legal framework for virtual assets. The bill defines digital assets and lays out penalties for unfair transactions, giving financial regulators the authority to inspect the service providers.

Companies that issue crypto assets will be mandated to disclose the total quantity issued, characteristics of the assets and the business model in the footnote of its regulatory report. They will also be required to disclose the reserve they hold after the asset has been issued.

Currently, related information is reported on the white paper, but “the accuracy and credibility of the disclosure weren’t guaranteed,” according to the financial authorities. The information previously was not available if companies did not disclose it in a footnote, despite its relevance to the financial statement.

Firms that hold crypto assets for investment purposes must also disclose their holdings' book and market value. Virtual asset service providers will be mandated to disclose the quantity and market value of the assets held by their customers.

The financial regulators also strengthened the accounting guideline that companies will use to classify revenue generated from selling crypto into profit. The financial regulators expect the guideline to reduce differences in accounting interpretations and make it easier for investors to compare companies.

The accounting guideline comes into effect immediately, while mandates on information disclosure in footnotes will be required starting next year.

Five listed companies issued a total of 10 tokens in Korea. They are messaging app operator Kakao, game developers Wemade and Netmarble, mobile business solutions provider Danal and software publisher Neowiz Holdings.

Together, they hold around 81.7 percent of the total amount issued.

Listed companies held a total of 201-billion-won ($155.3 million) worth of crypto assets in market value that was issued by a third party as of December. Around 28 percent of the holding is Kakao-issued Klay, followed by USDC and USDT.

Crypto asset service providers Upbit, Bithumb, Coinone, Korbit and Gopax held a total of 371-billion-won worth of crypto assets as of the end of last year, down 59 percent on year.

BY JIN MIN-JI [jin.minji@joongang.co.kr]