Beginning in 2024, South Korean companies will be required to report their cryptocurrency holdings in financial statements, according to new draft regulations from the nation’s Financial Services Commission (FSC).
This move, part of an extensive set of regulatory changes, seeks to bring more transparency and oversight to the corporate use of digital assets.
The proposed rules demand comprehensive details from companies about their cryptocurrency assets, including volume, market value, accounting policies, characteristics, and the impact on business models. Additionally, companies will need to provide information about any profits generated from these digital assets.
This development follows the recent passage of the Virtual Asset User Protection Act on June 30, highlighting South Korea’s continued efforts to curb unfair trading in the country.
The new act and proposed rules are designed to address uncertainties in crypto accounting and offer guidance for audit procedures, increasing the financial transparency of companies dealing in virtual assets.
Contrary to some expectations, costs related to the development of virtual asset platforms or the digital assets themselves will not be recognized as intangible assets. This approach underscores the unique challenges that regulators face in developing comprehensive accounting rules for the rapidly evolving digital economy.
The Financial Supervisory Service and the Accounting Standards Board are also cooperating on the development of audit procedure guidelines to accompany these new disclosure rules. The shared goal is to establish a framework that reflects the unique nature of digital assets while ensuring compliance and accountability in the corporate sector.
As the landscape of cryptocurrency continues to grow and evolve, regulatory bodies worldwide are grappling with how best to integrate these new forms of value into existing financial systems. South Korea’s recent steps demonstrate a commitment to fostering a transparent and accountable digital asset economy.