Mandatory 30-Day Prior Reporting for Major Shareholders of Crypto Exchanges: What Is the Impact?
Financial authorities have tightened market regulations by mandating a 30-day prior reporting for changes in major shareholders of crypto exchanges under the revised Special Financial Information Act.
A new regulation is now in effect, requiring virtual asset service providers (VASPs) to report changes in major shareholders to financial authorities 30 days in advance. Shifting from the previous post-reporting system, this measure significantly raises the barrier to entry and represents a stringent tightening of regulations aimed at ensuring market soundness and protecting investors.
Core of the Revised Act: Background of the Prior Reporting System
Through the revised Act on Reporting and Using Specified Financial Transaction Information, financial authorities have mandated that changes not only to major shareholders but also to core legal compliance systems—such as organizational structure, personnel, computing facilities, and internal control systems—must be reported at least 30 days prior to the scheduled change date. Previously, changes could be notified up to 14 days after the fact. The new policy reflects the government's intention to thoroughly verify the soundness of crypto exchanges from the early stages, given their growing market influence.
Exchanges involving multiple corporate entities or foreign capital are expected to face increased compliance costs, as securing documents and passing reviews will take considerable time. If changes are executed before receiving official approval from the authorities, the business registration may be revoked, and criminal penalties may apply, demanding extreme caution from the industry.
Market Impact and Future Outlook
Industry insiders evaluate this regulatory tightening as "an inevitable growing pain for institutional integration," yet express concerns over the drastically heightened barriers for new entrants. The intensified regulatory net could potentially dampen the M&A (mergers and acquisitions) ecosystem for small-to-medium exchanges lacking robust financial backing. Conversely, in the long run, weeding out unsound operators could enhance market credibility, acting as a positive catalyst to attract institutional investors.
FAQ: Mandatory Prior Reporting for VASPs
Q1. What happens if a major shareholder is changed without reporting?
A1. If changes are forced without prior reporting or before receiving official approval, the VASP registration can be rejected or ex officio revoked. Furthermore, administrative sanctions and criminal penalties may be imposed according to relevant laws.
Q2. What specific items are included in the reporting mandate?
A2. In addition to changes in major shareholders, significant alterations to core legal compliance systems, including computing facilities and internal control mechanisms, must also be reported 30 days in advance.