South Korea plans to legislate regulations for financial influencers, requiring disclosure of holdings and received compensation when promoting cryptocurrencies and stocks.

As social media influencers and KOLs in investment become increasingly popular, South Korea’s political sphere is considering stronger regulations. A ruling party lawmaker has proposed amendments requiring financial influencers who recommend stocks and cryptocurrencies online to disclose their holdings and received compensation, aiming to reduce conflicts of interest and misleading information. This move is seen as an important step for South Korea to formally incorporate online investment commentary into the financial regulatory framework and reflects a global trend toward stricter oversight of financial content creators.

South Korea Considers Legislation: Mandating Transparency from “Financial Influencers” on Investment Advice

According to Korean media Herald Business, Kim Seung-won, a member of the Democratic Party, is pushing to revise the Capital Markets and Financial Investment Services Act and the Virtual Asset User Protection Act. The draft focuses on establishing disclosure obligations for those providing stock or crypto investment advice through social media, publications, or broadcasts to the general public.

The proposal states that as social media platforms grow in influence, some unregulated “finfluencers” are having a tangible impact on market prices and investment decisions. Current regulations do not adequately cover these behaviors, leading to regulatory gaps.

What Must Influencers Disclose? Types of Holdings, Quantities, and Compensation

According to the draft, those who repeatedly provide investment advice or charge for recommending products must publicly disclose:

Whether they received compensation for their recommendations

The nature and details of any received compensation

Types and quantities of personal financial products and cryptocurrencies held

Specific scope and technical details will be further regulated later. Violations may be penalized similarly to unfair trading practices in the capital markets, such as price manipulation or front-running.

(South Korea Implements AI Monitoring Systems to Prevent Crypto Market Manipulation, Paving the Way for the Digital Assets Basic Act)

Regulatory Agencies: Violations Surge Alongside Registered Investment Advisors

Official data shows that from 2018 to 2024, the number of registered investment advisory firms and reported cases in South Korea increased over 12-fold. Senior researcher Ahn Yu-mi from the Korea Capital Market Institute notes that some individuals continue to spread exaggerated or false advertisements and promotions via social media without registration, involving price manipulation and improper profit-making.

She states that in an online-driven financial information environment, authorities need to establish more comprehensive pre-emptive supervision and post-incident penalties to reduce damages caused by information asymmetry to investors.

Aligning with International Standards: UK and US Strengthen Regulations on Financial Influencers

South Korea’s legislative movement also aligns with international regulatory trends. The UK Financial Conduct Authority (FCA) has explicitly mandated that financial product promotions require approval from authorized entities, and in 2023, it introduced stricter rules for crypto advertising.

In the US, the Securities and Exchange Commission (SEC) has penalized celebrities and influencers who failed to disclose promotional compensation, including TV personality Kim Kardashian and NBA Hall of Famer Shaquille O’Neal.

(After the FTX incident, crypto KOLs have become more cautious about collaborations with Web3 companies)

If South Korea completes this legislation, it will further clarify the legal responsibilities of financial influencers, gradually integrating social investment commentary into the regulatory framework, and setting higher standards for transparency in crypto and stock markets.

This article on South Korea’s proposed legislation to regulate financial influencers and require disclosure of holdings and compensation for crypto and stock promotions first appeared on Chain News ABMedia.