- South Korea’s ruling party proposes amendments to require social media finfluencers to disclose crypto holdings and related compensation
- Penalties for violations would align with existing capital market offenses, reflecting similar regulatory approaches seen in the UK and US
South Korea is moving to tighten oversight of online financial influencers who promote cryptocurrencies and other investment products. A new legislative proposal would compel these so-called “finfluencers” to reveal both their own holdings and any compensation they receive when recommending digital assets or financial instruments.
Proposed disclosure rules for finfluencers in South Korea
The initiative centers on amendments to the Capital Markets Act and the Virtual Asset User Protection Act, submitted by Kim Seung-won, a lawmaker from the Democratic Party and member of the National Policy Committee. The proposal targets individuals who frequently issue investment opinions or guidance through social media channels, mass-market publications, or broadcast platforms. Its primary objective is to give investors clearer information about potential conflicts of interest when they encounter investment content online.
Under the draft changes, influencers who discuss or endorse cryptocurrencies or other investment products would be obligated to publicly disclose any compensation connected to their recommendations. This would cover payments in cash as well as other forms of consideration tied to particular assets or promotions. In addition, these figures would need to reveal which financial products they personally own, including the types and quantities of crypto assets in their portfolios. The scope of who qualifies as a covered influencer and the precise method of disclosure would not be set directly in the legislation. Instead, these specifics would be laid out later through a presidential decree, giving the executive branch room to define detailed standards and reporting formats.
Addressing conflicts of interest and investor protection
The proposed amendments are framed as a response to the growing influence of online personalities in shaping retail investor behavior. Kim Seung-won pointed to increasing concern over social media commentary that carries significant weight with followers but operates outside traditional regulatory oversight. According to the report, some influencers have been accused of spreading inaccurate or incomplete information about digital assets, while at the same time trading those assets for their own benefit. This pattern of self-dealing can leave individual investors exposed to price swings that are driven more by promotional tactics than by underlying fundamentals.
By forcing disclosure of both personal holdings and promotional compensation, lawmakers aim to make these relationships more transparent. When audiences can see whether an influencer owns a particular token or has been paid to feature it, they may be better positioned to judge the credibility and motives behind the content. The proposal also reflects a broader attempt to align crypto-related promotions with existing standards in more traditional capital markets. The report noted that sanctions for failing to comply with the new disclosure obligations would be tied to penalties already available for capital market violations, including offenses such as price manipulation and front-running. That approach suggests that violations of the proposed rules could be treated on par with other serious market abuses, rather than as minor disclosure lapses.
South Korea’s move in the context of global crypto promotion rules
The legislative push in South Korea mirrors a wider international trend to bring tighter rules to financial advertising on social media, particularly when it involves crypto assets. Authorities in several major jurisdictions have already taken steps to curb misleading promotions and undisclosed paid endorsements.
In the United Kingdom, the Financial Conduct Authority (FCA) limits the promotion of financial products to parties that have obtained prior approval to advertise. Within that framework, the FCA introduced specific financial promotion rules for crypto assets in 2023. These rules seek to prevent advertising that understates the risks of volatile or speculative digital tokens. They aim to ensure that marketing materials for crypto do not give the impression of safety or guaranteed returns where none exist.
The United States has pursued a more enforcement-driven path, especially around undisclosed celebrity endorsements. The U.S. Securities and Exchange Commission has imposed financial penalties on several high-profile figures who promoted crypto assets online without making clear that they had been paid. High-visibility cases have involved personalities such as Kim Kardashian and former NBA player Shaquille O’Neal. Those actions underscored that regulators view hidden promotional payments as a serious breach of securities law, particularly when they reach large audiences through social media.
South Korea’s proposal aligns with these developments by focusing on transparency and liability in the digital marketing of financial products. While the U.K. and U.S. approaches differ in structure, the underlying concern—protecting investors from misleading or conflicted promotion—is shared. The Korean amendments would explicitly pull social media finfluencers into a regulatory framework more similar to that governing traditional investment advisers and market participants.
Conclusion
The new bill advanced by Kim Seung-won marks a significant step toward formal oversight of online investment promotion in South Korea. By requiring finfluencers to reveal both their crypto and financial holdings and any related compensation, the proposal aims to expose conflicts of interest that might otherwise remain hidden from retail investors. Planned penalties aligned with serious capital market offenses indicate that noncompliance would carry substantial risk for violators. In line with moves by regulators in the United Kingdom and the United States, South Korea is signaling that promotion of digital assets on social media should be subject to clear disclosure standards and enforcement mechanisms designed to safeguard investors.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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