South Korea's ruling Democratic Party, led by lawmaker Kim Seung-won, has introduced a groundbreaking legislative proposal aimed at curbing market manipulation and protecting retail investors in the country's vibrant cryptocurrency market. The bill, proposed on February 25, 2026, seeks to amend the existing Capital Markets Act and the Virtual Asset User Protection Act to impose strict new disclosure requirements on financial influencers, or "finfluencers."
The core of the legislation mandates that any individual who repeatedly provides investment advice or receives compensation to promote digital assets or stocks must clearly disclose the type and quantity of assets they hold related to their recommendations. Furthermore, they must reveal any financial compensation received in exchange for promoting specific tokens. The law targets promotions made via social media, livestreams, or broadcast channels.
The primary goal is to prevent undisclosed promotional activity that facilitates pump-and-dump schemes, where influencers hype an asset they've accumulated before selling into the resulting price surge. Violations of the proposed rules would carry penalties similar to those for unfair trading practices, including fines and potential criminal liability.
This initiative is part of a broader regulatory expansion in South Korea throughout 2026. The country's Financial Supervisory Service (FSS) has already deployed AI-based monitoring tools designed to detect abnormal trading patterns and market manipulation in real-time. Additional measures introduced this year include new reporting requirements for foreign property investors, who must now disclose cryptocurrency transaction histories in certain cases.
If passed, this law would represent one of the world's first comprehensive disclosure regimes specifically targeting social media-driven financial promotion in the crypto sector, potentially serving as a model for other nations.
