New Legislation for Financial Influencers in South Korea
In a bid to enhance investor protection and combat market manipulation, South Korea’s Democratic Party has proposed new legislation aimed at financial influencers, commonly referred to as “finfluencers.” This law, championed by lawmaker Kim Seung-won, seeks to obligate these influencers to disclose their personal financial interests and any compensation they receive when they promote cryptocurrencies or stocks through various media channels, including social platforms and livestreams.
Proposed Changes to Existing Regulations
The proposed changes would amend existing regulations, specifically the Capital Markets Act and the Virtual Asset User Protection Act. They lay out requirements for influencers to publicly declare the specifics of the assets they hold when endorsing particular financial products. Additionally, the law imposes obligations on influencers to divulge any payments received for their recommendations.
Penalties for Non-Compliance
Should influencers fail to comply with these regulations, they could face penalties akin to those imposed for unfair trading practices, which may include financial fines and even criminal charges. This initiative seeks to thwart schemes known as “pump-and-dump,” where influencers artificially inflate asset prices before liquidating their own holdings, thus profiting off unsuspecting investors.
Broader Regulatory Trends
The Democratic Party highlighted the necessity of this legislation as part of a broader trend of regulatory enhancement in South Korea throughout 2026. The South Korean Financial Supervisory Service is already leveraging AI technology to monitor trading practices for unusual patterns indicative of market manipulation.
Impact on Foreign Investors and the Cryptocurrency Market
Moreover, the current year has seen the introduction of new requirements for foreign investors in real estate, mandating disclosures of cryptocurrency transactions in specific circumstances. Given that South Korea is recognized for having one of the most vibrant retail cryptocurrency markets in the world, this law could emerge as one of the most significant global efforts to regulate social media-facilitated financial promotions in the digital asset arena, as pointed out by regulatory analysts.
