South Korean State Officials Cannot Trade or Own Crypto Assets

South Korea has banned state officials from trading in crypto assets. Even where doing so does not affect state affairs, officials can still face disciplinary actions.

All Out Crypto Ban against State Officials 

According to the Maeil Business Newspaper, South Korea’s government explicitly “issued a ban on virtual currency holdings and transactions to all government officials.” The ban appeared in a document entitled “Virtual currency holdings and transaction-related information for civil servants.” In clarifying the ban, the newspaper added that “The personnel department requested that they [civil servants] refrain from holding and trading virtual currency even if there is no job relevance…This is the first time the government has formulated a virtual currency ban for all public officials.”

Vague and Implicit Disciplinary Actions 

Officials from South Korea’s personnel department stated that where cryptocurrency trading is done during office hours, public employees “are in violation of the prohibition of forbearance obligations under the civil servants’ law.” “Even if there is no job relevance,” employees “could be subject to discipline.” In emphasis, the newspaper quoted a top-ranking government official as stating,

“The disciplinary issue is not a quantitative cut, but a problem of interpretation of the law. Each ministry should judge the possibility of discipline.”

Wider Implications of the Ban 

Accordingly, state bodies such as the Fair Trade Commission, the Korean Financial Services Commission (FSC) among others have requested employees “to refrain from investing in virtual currency”. In January 2018, Hong Nam, South Korea’s senior-most Office of Policy Coordinator, urged all state officials to abide by the ban.

In March, the country’s anti-corruption watchdog published a “Code of Conduct Guide to Cryptocurrency” for all government institutions. Article 12 of the Civil Servant Code of Conduct prohibits employees from using “the information learned during their duties to assist in trading or investing.” in crypto assets. As a result, the FSS, an autonomous agency is set to review its code of conduct.

On the other hand, a bill introduced in early 2018 sought to make it mandatory for public officials to declare digital asset investments. Accusations that state officials were leveraging privileged information to engage in market manipulation and insider trading precipitated the tabling of this bill.

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