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South Korea is introducing new regulations for detailed crypto disclosures from January 2024 to strengthen accounting transparency
South Korea plans to introduce new rules starting in January 2024 that will require companies that issue or hold cryptocurrencies to provide detailed crypto disclosures in their financial reports. These new disclosures are expected to contain a variety of information, including the quantity and characteristics of the crypto tokens, the company's business model, and the internal accounting policies relating to the sale of cryptocurrencies and the profits associated therewith. Companies that hold cryptocurrencies for investment purposes are also required to disclose information about the token's classification, book value, and market value of their holdings. The Financial Services Commission (FSC) of South Korea emphasizes that the main objective of these rules is to ensure accounting transparency...
South Korea is introducing new regulations for detailed crypto disclosures from January 2024 to strengthen accounting transparency
South Korea plans to introduce new rules starting in January 2024 that will require companies that issue or hold cryptocurrencies to provide detailed crypto disclosures in their financial reports. These new disclosures are expected to contain a variety of information, including the quantity and characteristics of the crypto tokens, the company's business model, and the internal accounting policies relating to the sale of cryptocurrencies and the profits associated therewith. Companies that hold cryptocurrencies for investment purposes are also required to disclose information about the token's classification, book value, and market value of their holdings.
The Financial Services Commission (FSC) of South Korea emphasizes that the main aim of these rules is to strengthen accounting transparency. Last year's Terra collapse, which wiped out around $40 billion in just a few days, has led to increased pressure to continue investigations by legal authorities.
In the past, there have been differing views in South Korea between companies and their auditors about when selling virtual assets to customers should be considered profit. The new rules aim to bring clarity to this issue by stipulating that the sale of virtual assets will only be recognized as profit once the company has fulfilled its obligations to its holders. In addition, the costs associated with the development of virtual assets and their platforms are not recorded as intangible assets.
Guidelines for examination procedures are currently being developed to support the implementation of the new rules. On July 7, these draft guidelines were approved by the Korea Accounting Standards Board.
With the introduction of these new rules, South Korea aims to improve the transparency and stability of the cryptocurrency market. However, the exact impact on companies and investors remains to be seen.
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