South Korea’s Financial Services Commission is preparing to revise how it screens major shareholders of virtual-asset service providers, with a proposed carveout for some criminal penalties that currently risk automatic disqualification. The change would apply where penalties arose through vicarious liability provisions or involved minor legal violations.

The proposal was disclosed in a written response the FSC submitted to the National Assembly’s Political Affairs Committee. According to the regulator, the revision would reflect recommendations from the presidential Regulatory Rationalization Committee and bring crypto-sector screening standards closer to approaches already used under other financial laws.

Planned revision to shareholder screening

The FSC said it intends to add exceptions to the qualification standards used for major shareholders of crypto firms. Under the plan, criminal penalties linked to a shareholder’s legal violations would not necessarily block registration if those penalties were imposed under vicarious liability rules or were tied to relatively minor breaches.

In explaining the direction of the revision, the commission said it is looking to precedents under the Capital Markets Act and the Online Investment-Linked Finance Business Act. The stated aim is to incorporate similar treatment into the screening framework for virtual-asset businesses rather than applying disqualification uniformly in every case.

Broader tightening remains in place

The move comes as South Korea is also amending the enforcement decree of the Act on Reporting and Use of Certain Financial Transaction Information. Those amendments would expand the grounds for disqualifying major shareholders of virtual-asset businesses by adding records of violations to the review criteria.

The strengthened screening would apply both when a business seeks a new registration and when it undergoes its renewal review, which takes place every three years. The FSC’s planned exceptions therefore sit alongside a broader effort to formalize and tighten shareholder checks across the sector.

Related review of network separation rules

In the same response, the FSC said it also plans to pursue changes to network separation rules in the financial industry to better accommodate blockchain and artificial intelligence developments. The commission indicated that easing or lifting those rules could be considered through a regulatory sandbox for companies judged to have sufficient security and AI capabilities.

It also said it would review arrangements for operations that require connections to external networks, including public blockchains. That signals a wider policy review beyond shareholder qualifications, focused on how existing financial-sector controls fit newer digital-asset and AI use cases.

Stablecoin consultations continue

The FSC said consultations on won-based stablecoins will continue as it reviews the proposed Digital Asset Act and related laws. In that process, the regulator said it will look at international examples as it considers ways to improve interoperability and scalability for won stablecoins.

The commission also said it will monitor the market impact of Upbit’s fee-waiver policy for stablecoins on competition. Any changes the FSC considers necessary after that review are expected to be reflected during the legislative process for the Digital Asset Act, which remains the next confirmed venue for further policy development.

Source: en.bloomingbit.io