Bill to mandate public officials declare crypto assets on verge of passing

South Korea's parliament is on the verge of passing a revision bill to make it mandatory for high-ranking public officials to declare any cryptocurrency asset holdings, just a few weeks after a loophole in the law aimed at preventing corruption of public officials was exposed.

Lawmakers are looking to float the revision of the Public Service Ethics Act at the plenary session of the National Assembly by as early as on Thursday, following an approval at a standing committee Wednesday afternoon.

The revision bill aims to have key public officials in the central and regional governments, the parliament and the judicial branch disclose their annual crypto asset holdings to the public annually no matter how small or large they are starting in 2023. The bill also indicates how to determine the value of the crypto assets a person declares, taking their volatile nature into account.

Moreover, Korea's crypto asset exchanges will have to submit records about an individual's crypto holdings and transactions for confirmation upon the request of the authorities, meaning that the bill does not necessarily hinge on a public official's voluntary actions, according to the bill.

The revision bill will go into effect by as early as December.

The bill aims to fix problems revealed earlier this month stemming from cryptocurrency assets being in a legal gray area. The country permits a verified individual's crypto transactions using local currency, but the legal status of crypto assets remains vague. Thus until now, crypto holdings have not counted as assets needing declaration by public officials.

The Public Service Ethics Act has stipulated that a high-ranking public official must declare cash or securities that have at least 10 million won ($7,500) in value, as well as land or other property. Failure to do so means the public official failed to maintain integrity in their public service and could potentially be liable for corruption, according to the law.

In March, over 2,000 public officials in Korea -- excluding lawmakers and judges -- declared their asset holdings with the total disclosed assets standing at 1.9 billion won per official on average. A separate disclosure later in March showed that each National Assembly lawmaker declared 2.1 billion won in assets on average.

What roiled the political scene here was a revelation earlier this month that Rep. Kim Nam-kuk, an attorney-turned-lawmaker, owned a significant amount of crypto assets. He had declared his assets without including his crypto holdings.

Kim argued that his asset declaration had been done "legitimately." Kim had disclosed 1.53 billion won in assets in 2023 -- lower than the average of the some 300 National Assembly lawmakers. However, with his undeclared crypto assets, his total assets might have been worth sixfold or more in light of the revelations in March 2022, before he sold his investment in wemix tokens.

The revelations also indicated that Kim had received crypto airdrops, or free crypto giveaways, opening up the possibility that he could have been subject to illegal lobbying efforts. Furthermore, Kim took part in a bill proposal to defer taxation of an individual's cryptocurrency holdings from 2023 to 2025.

Kim is also in hot water because he was reportedly found to have traded cryptocurrency during parliamentary standing committee meetings in November.

Kim, a first-term lawmaker, left the Democratic Party of Korea on May 14. The party's internal ethics panel is working to take disciplinary action against Kim since his departure from the party.