A proposed rule would make it necessary for internet investment influencers to disclose their holdings and paid promotions. The penalty for breaking this law might be as severe as those for market manipulation.
According to reports, South Korea is getting ready to make new legislation that will require social media stars who promote cryptocurrencies and equities to say what they own and whether they are getting paid.
A report from the Korean-language business news site Herald Business says that Democratic Party lawmaker Kim Seung-won, who is on the National Assembly’s Political Affairs Committee, is working on changes to the Capital Market and Financial Investment Business Act and the Act on the Protection of Virtual Asset Users.
Source: National Assembly Library
Disclosure requirements and enforcement scope
The idea says that those who consistently give advise or get paid to get people to buy or sell financial goods or virtual assets must tell the public how much money they are getting and what kind of assets they own. A presidential order would set the conditions for publications, online communications, and broadcasts.
According to the research, violations might result in fines that are as severe as those for market manipulation or insider trading.
Lawmaker flags risks of “Finfluencers”
The goal of the program is to make online investment promotion more open and reduce conflicts of interest. Kim reportedly added, “So-called fin-influencers are coming up, giving investment advice to unknown people without being paid from positions of great public influence.”
These people are giving out wrong information and making conflicts of interest. But their opinions have a big effect on the public, which makes it hard to predict how much money investors will lose.
The action comes after the Financial Supervisory Service reported that the number of reports about quasi-investment advisors (QIAB), which are groups in Korea that give individuals general investment advice through the media, went from 132 in 2018 to 1,724 in 2024.
Other nations’ regulators have also taken similar actions. The Financial Conduct Authority in the UK only lets financial promotions happen with their permission. The SEC and FINRA in the US have both fined and punished companies for not disclosing promotions.
Last month, Italy’s market watchdog, the Commissione Nazionale per le Società e la Borsa (CONSOB), sent out new information from the European Securities and Markets Authority (ESMA) saying that all EU investment and advertising rules apply to social media “finfluencers,” even those who promote crypto and other high-risk products.