According to draft regulations released on Tuesday by South Korea’s financial regulator, companies who own or issue cryptocurrency will be required to disclose these holdings in their financial statements starting 2024.

The new rules will require companies to disclose details about their business model, accounting policy, and characteristics of the virtual currency they sell, as well as the profits, volume, and market value.

In its announcement, the Financial Services Commission (FSC), which decided on the draft rules on July 30, stated that the measures were taken to improve the accounting transparency following the passage of the Virtual Asset User Protection Act.

Before, auditors and companies had different opinions about the criteria and timing for determining if the sale of virtual goods to customers was profit. According to these rules, companies that sell virtual assets will recognize the sale as profit once they have fulfilled their obligations towards the holders.

The announcement stated that costs incurred for developing virtual assets or their platforms would not be considered intangible assets.

Over the last year, accounting experts from around the world have been discussing accounting uncertainty with the Financial Services Commission and other stakeholders, including the Accounting Standards Board, Financial Supervisory Service, and the Accounting Standards Board. The announcement also stated that guidelines for audit procedures are in preparation.

South Korea passes crypto bill for user protection

Sandali Handagama is the editor.