Sebastian Sinclair

A South Korean committee approved a bill on Monday requiring legislators to reveal their crypto assets following a scandal involving a high-ranking lawmaker&#8217;s undisclosed investments earlier this month.



Existing legislation mandates that lawmakers divulge their traditional assets, such as cash, stocks and real estate, within a month following their election.



It’s meant to ensure transparency while deterring high-ranking officials from engaging in any possible conflicts of interest. But the law previously fell short of capturing crypto proceeds.



Under proposed amendments, serving members of the Assembly are obligated to announce their digital assets by the conclusion of the following month, <a href="http://english.chosun.com/m/svc/article.html?contid=2023052301425&amp;Dep0=c.newsnow.co.uk&amp;utm_source=c.newsnow.co.uk&amp;utm_medium=unknown&amp;utm_campaign=english" target="_blank" rel="noreferrer noopener">local media reported</a>.



In South Korea, the passage of a bill involves initial drafting by eligible parties, scrutiny by relevant committees including the Legislation and Judiciary Committee, followed by debate and voting in a plenary session.



The approved bill then proceeds to the President for assent and, if not vetoed, it becomes law after public promulgation. The bill is currently under review by the legislative committee for any possible conflicts with existing laws, where it will then be debated in a plenary session.



In the US, the <a href="https://www.congress.gov/112/plaws/publ105/PLAW-112publ105.htm" target="_blank" rel="noreferrer noopener">2012 STOCK Act</a> mandates Congress members to disclose financial holdings, but it does not explicitly cover crypto. An advisory memo in 2018, however, suggested they report crypto assets similarly. 



In the UK, MPs must disclose financial interests, including shares, under the <a href="https://publications.parliament.uk/pa/cm201719/cmcode/1882/188201.htm" target="_blank" rel="noreferrer noopener">Register of Members&#8217; Financial Interests</a>, although, like the US, there&#8217;s no specific guidance on crypto.



<h2 class="wp-block-heading">Lessons learned from South Korean crypto scandal</h2>



South Korea’s own legislative push follows directly from a reported scandal involving Democratic Party lawmaker Kim Nam-kuk and his millions in undisclosed crypto holdings.



Reports claimed Kim <a href="https://blockworks.co/news/south-korea-token-investigation-politics">owned tokens from game company</a> Wemade in 2021, worth some $4.5 million at the time. That led his own party to conduct an investigation into his conduct before he finally decided to <a href="https://koreajoongangdaily.joins.com/2023/05/14/national/politics/Democratic-Party-Kim-Namkuk-Cryptocurrency-investment/20230514114312797.html" target="_blank" rel="noreferrer noopener">call it quits</a>.



Kim may have liquidated all his crypto holdings before the implementation of South Korea&#8217;s travel rule in March 2022. The rule requires all crypto exchanges within the country to report transactions in excess of 1 million won (roughly $757) and to identify entities behind them.



While the controversy has centered on the fact that Kim <a href="https://koreapro.org/2023/05/lawmaker-kim-nam-kuk-exits-democratic-party-amid-cryptocurrency-controversy/" target="_blank" rel="noreferrer noopener">reportedly</a> emptied his digital wallets just before the rule took effect, he’s also come under fire for a separate but related matter.



Kim&#8217;s co-sponsorship of a bill in July 2021, advocating for postponed taxation on digital assets, has raised eyebrows as it occurred about half a year before he liquidated his Wemade tokens.



The lawmaker has publicly refuted those allegations and said he would take legal action against media companies for false reporting.



In a <a href="https://www.facebook.com/lawmaker2020/posts/pfbid037fyHfhWMA8pg8sanjyp3iARH4gvbjXiL1kEQAf1SsnM6mJpVV95tbA5x8w2sHaawl" target="_blank" rel="noreferrer noopener">Facebook post</a> earlier this month, Kim apologized to his party members, stating he would “fight unfair political attacks to the end and uncover the truth” as an independent member of Congress.



“Over the past week, media reports based on false facts have been pouring out,” Kim said, according to a rough translation of the post. “I&#8217;m leaving our Democratic Party for a while, but I will always support and be with the Democratic Party.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

lawmakers

South Korean Committee Advances Bill for Crypto Transparency Among Legislators

Casey Wagner

<div id="highlights-block_61e9e6046a3d2" class="highlights">
 <ul>
 <li>Cryptocurrency mining experts appeared before Congress Thursday to discuss the industry’s energy usage </li>
 <li>Efforts to move toward renewable energy sources are increasing, witnesses said </li>
 </ul>
 
</div>



Members of Congress put proof-of-work cryptocurrencies in their crosshairs Thursday as lawmakers called the energy usage of crypto miners into question.



Digital asset mining experts appeared before The House Committee on Energy and Commerce for the hearing “Cleaning Up Cryptocurrency” — where industry execs focused on renewable energy upsides and broke down differences between cryptocurrencies for representatives.&nbsp;



Bitcoin mining’s energy consumption is “deeply concerning,” Rep. Diana DeGette (R-Colo.) said during her opening statement. Carbon emissions must be at the forefront of any discussion about blockchain technology, she added.&nbsp;



Bitcoin and ethereum mining operations emitted more than 78 million tons of carbon dioxide into the atmosphere last year, according to a <a href="https://forexsuggest.com/global-impact-of-crypto-trading/">report</a> cited by the subcommittee.



Most witnesses did not deny the energy usage — although many made a point to highlight renewable efforts — but instead chose to focus on the value digital assets add to the economy.&nbsp;



“There&#8217;s an energy consumption problem, yes, but on the other hand, there are incredible new opportunities being created by this industry,” John Belizaire, witness and founder and CEO of Soluna Computing, told Blockworks after the hearing. “This industry could catalyze the renewable energy revolution, which is something that we&#8217;re excited about, it will create more jobs.”&nbsp;



And bitcoin doesn’t equate to all crypto mining, after all, witness and Cornell Tech professor Ari Juels told lawmakers.



“Bitcoin does not equal blockchain,” Juels said. “The tremendous promise of blockchain technology does not require bitcoin or its energy-intensive component called proof-of-work.”



Proof-of-stake versus proof-of-work was a key focus of the hearing. Regulators in the European Union have recently called for the banning of the proof-of-work model, which is used to mine bitcoin, because of its high energy consumption.&nbsp;&nbsp;



The prominent sentiment that proof-of-stake mining uses less energy and should therefore be the industry standard is misguided, BitFury CEO Brian Brooks argued.&nbsp;&nbsp;



“Bitcoin is important because it introduced the world to the concept of a fully decentralized, secure trustless system of financial value exchange that turns on proof-of-work, not as a necessary evil, but as a positive feature of its design,” he said in a prepared statement. 



Replacing one with the other would not work, contrary to what some might believe, Brooks said.&nbsp;



“An idea that sometimes circulates is that somehow we could have all of the positives without the energy usage if we would just abolish proof-of-work and migrate blockchains exclusively to proof-of-stake protocols,” he said. “Proof-of-stake is terrific, but it is not a substitute for proof-of-work, which exists for an entirely different set of purposes.”&nbsp;



When prodded by DeGette on whether proof-of-work is wasteful, Brooks maintained that the value of bitcoin outweighs its energy consumption.&nbsp;



&#8220;It&#8217;s clearly not wasted,&#8221; he said. &#8220;It&#8217;s an asset that large numbers of people are willing to pay for, for a variety of reasons.&#8221;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

lawmakers

Newsletter

Blockworks Research