South Korean Lawmakers Push for Mandatory Disclosure Rules for Financial Influencers in Crypto and Stock Markets
New legislation under development would mandate that digital investment influencers disclose their asset portfolios and sponsored content arrangements, facing sanctions similar to those imposed for market manipulation offenses.
New regulations are being developed in South Korea that would compel social-media influencers who promote digital currencies and equities to make public disclosures about their personal holdings and any financial compensation they receive, according to recent reports.
Kim Seung-won, a lawmaker from the Democratic Party who serves on the Political Affairs Committee of the National Assembly, is currently working on proposed modifications to both the Capital Market and Financial Investment Business Act and the Act on the Protection of Virtual Asset Users, as reported by Herald Business, a Korean-language publication focused on business news.
According to the proposed legislation, people who regularly provide guidance or accept payment to motivate the general public to purchase or dispose of financial instruments or digital assets would be required to make public the payments they have received as well as the categories and amounts of assets in their possession. This disclosure obligation would extend to guidance disseminated via publications, digital communications and broadcast media, with specific implementation standards to be established through presidential decree.
Those who fail to comply may face sanctions with severity levels comparable to penalties imposed for market manipulation or insider trading violations, the report indicates.
Lawmaker warns on "finfluencer" investor risks
The legislative effort seeks to minimize conflicts of interest while enhancing transparency standards in digital investment promotion activities.
"So-called fin-influencers are emerging, offering investment advice to unspecified individuals without compensation from positions of significant public influence,"Kim reportedly said.
"These individuals are providing inappropriate information and creating conflicts of interest. However, their opinions have significant influence on the public, causing unpredictable losses to investors,"he added.
This legislative initiative emerges against a backdrop of data from the Financial Supervisory Service revealing that complaints and reports concerning quasi-investment advisors (QIAB), which are Korean entities that deliver general investment guidance to individuals through media channels, surged dramatically from 132 cases in 2018 to 1,724 cases in 2024, as cited in the report.
Cointelegraph contacted Kim Seung-won seeking additional comment on the proposed legislation, but had not received a response by publication.
Global regulators tighten rules on finfluencers
Financial regulators in other jurisdictions have pursued comparable regulatory initiatives. The Financial Conduct Authority in the United Kingdom permits financial promotional activities only when they have received advance approval, while both the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) have imposed monetary penalties and formal reprimands connected to promotional activities that were not properly disclosed.
In the previous month, Italy's regulatory authority for financial markets, the Commissione Nazionale per le Societa e la Borsa (CONSOB), distributed updated guidance originating from the European Securities and Markets Authority (ESMA) emphasizing that European Union investment regulations and advertising standards are fully applicable to social-media "finfluencers," specifically including those who promote cryptocurrencies and other high-risk financial products.