In South Korea, Groundbreaking New Regulations in the Cryptocurrency Sector Are on the Way

South Korea is preparing new regulations for financial influencers who give stock and cryptocurrency advice on social media. According to local media reports, Kim Seon-won, a member of the National Assembly from the Democratic Party of Korea, is working on a draft that would amend both the Capital Markets Law and the Virtual Asset User Protection Law.

The proposed regulation aims to impose mandatory disclosure obligations on “financial influencers” who recommend stock or cryptocurrency transactions on social media and similar platforms. According to the draft, individuals who regularly provide investment advice to an unspecified number of people or who earn income from this activity will be required to publicly disclose the fees they receive, as well as the types and amounts of their holdings in relevant financial products and crypto assets. The scope and technical details of the implementation will be clarified by a Presidential decree.

Under the new regulation, those who fail to comply with the obligations may face sanctions similar to those imposed for unfair trading practices in the capital market. These sanctions include penalties equivalent to those stipulated for violations such as market manipulation and front-running. The main aim of the bill is stated as increasing transparency in investment information, reducing conflicts of interest, and preventing investor losses resulting from information asymmetry.

According to official data, the number of applications for “investment advisory services” in South Korea increased from 132 in 2018 to 1,724 in 2024. This more than twelvefold increase in six years indicates the rapidly growing role of social media influence in financial markets. Regulators are drawing attention to the fact that some individuals operating outside the formal economy are profiting through misleading statements, false advertising, and even market manipulation.

Similar steps are being taken internationally. Regulatory bodies such as the Financial Conduct Authority in the UK and the SEC in the US have increased oversight and compliance requirements for social media accounts that produce financial content in recent years.

*This is not investment advice.