Public Officials Disclose Assets... But Coin Asset Concealment and Conflicts of Interest Remain in the Dark

Increased Accessibility and Utilization of Virtual Assets
Constant Risk of Asset Concealment and Conflicts of Interest Among Public Officials
Legislative Research Office "Calls for Regulation Revisions"

There have been calls to include virtual assets such as Bitcoin in the disclosure of public officials' assets and to strengthen related regulations.

This is because, as accessibility and utilization of virtual assets have increased, the possibility of asset concealment and conflicts of interest related to them is not insignificant.

On the 27th, the National Assembly Research Service stated in its report titled "Concerns and Improvement Tasks Regarding Corruption in Public Office Related to Virtual Assets" that "As accessibility and frequency of use of virtual assets have recently increased, there are concerns that conflicts of interest related to virtual assets may arise among public officials."

According to the Research Service, although there has been a virtual asset investment frenzy in Korea in recent years, there are either no regulations or unclear regulations related to public office ethics or conflict of interest prevention. In fact, the regular asset change disclosures of high-ranking public officials released last March do not reveal holdings of virtual assets such as Bitcoin, Ripple, or Ethereum.

Currently, Korea has legal regulations to prevent conflicts of interest for public officials regarding stocks and real estate. However, for virtual assets, only internal codes of conduct (directives) of related institutions classified as affiliated agencies regulate them.

If the possibility of conflicts of interest is not controlled in advance, public officials responsible for virtual asset-related duties may make policy decisions favorable to their economic interests or use job-related information to trade virtual assets, thereby illegally increasing their wealth at any time.

The Research Service said, "It is difficult to conclude that conflicts of interest related to virtual assets occur only in the 16 institutions mentioned as virtual asset-related agencies," and added, "It is necessary to consider measures to generally apply conflict of interest prevention regulations to all public officials."

Furthermore, it stated, "It is necessary to include virtual assets in the scope of assets subject to the public officials' asset registration and disclosure system, like stocks and real estate, to prevent asset concealment or illegal wealth accumulation through virtual assets."

Currently, virtual assets are not included in the disclosure targets of the public officials' asset registration and disclosure system. In contrast, in the United States, public officials required to register assets must report if they hold more than 1,000 digital assets as of the end of the registration period or earn more than $200 in income through digital assets during the registration period.

The Research Service also emphasized the need to clearly define the scope of virtual assets subject to the application of public office ethics standards. This is because clarifying the nature of assets whose classification as virtual assets, such as NFTs (non-fungible tokens), is unclear will enable retrospective sanctions for violations of regulations.

The Research Service stressed, "Considering that various corruption cases involving virtual assets have already been circulated, it is hard to say that establishing anti-corruption systems for virtual assets is premature," and added, "Ethical standards related to virtual assets must be promptly established in the field of public office ethics."