TLDR:

• • South Korea’s Democratic Party is drafting bills requiring finfluencers to disclose crypto holdings and compensation before advising followers.
    
  • Reports of illegal investment advisory activity surged from 132 cases in 2018 to 1,724 cases in 2024, prompting stricter oversight.
    
  • Penalties for finfluencer violations are expected to match existing laws on market manipulation and pre-emptive trading in Korea.
  • Researchers are calling for pre-monitoring, post-sanctions, and added social media rules to protect retail crypto investors from misleading advice.

South Korea is proposing a law that would require finfluencers to disclose their crypto holdings. Democratic Party lawmaker Kim Seung-won is leading the push with two amendment bills.

The legislation targets influencers who advise followers on stocks and virtual assets through social media. Holdings, compensation, and asset quantities would all need to be made public. Reports of illegal investment advisory activity have risen sharply in recent years, prompting the move.

Proposed Bill Targets Crypto Finfluencers Operating Without Disclosure

Rep. Kim Seung-won, a member of the National Assembly’s Political Affairs Committee, is preparing the amendments.

One bill proposes changes to the Capital Markets Act, while the other targets the Virtual Asset Users Protection Act. Together, they would require crypto finfluencers to reveal what they hold before advising others to buy or sell. This applies to those who give repeated advice or charge fees for investment guidance.

The rules would cover advice shared through social media, broadcasts, publications, and other communications. A presidential decree would set the exact boundaries of who falls under the law.

Penalties for non-compliance are expected to match those for market manipulation and pre-emptive trading. This places crypto finfluencers under the same legal standards as other financial market participants.

Rep. Kim explained the reasoning behind the proposal, stating that “so-called fink influencers are appearing who give advice on investment decisions to an unspecified number of people without receiving compensation from positions that can have a great influence on the public.”

He pointed to a growing number of influencers advising large audiences without revealing their own crypto positions.

When influencers hold assets they promote without disclosure, it raises serious conflict-of-interest concerns. The bill directly addresses this gap by making transparency a legal requirement.

The Financial Supervisory Service recorded 1,724 reports of illegal advisory activity in 2024, up from just 132 in 2018. That increase spans only six years and reflects how quickly the problem has grown.

The rise of online and social media channels has made it far easier to reach investors without proper credentials. Crypto markets, in particular, have seen a surge in influencer-driven trading activity.

Korea Aligns With Global Push to Regulate Crypto Finfluencer Activity

Other major markets have already moved to regulate finfluencer conduct. The UK’s Financial Conduct Authority requires pre-approval of all promoted financial products, including digital assets.

The US Securities and Exchange Commission and FINRA have issued fines against influencers who violated disclosure rules. South Korea’s proposal follows the same direction these regulators have already taken.

Ahn Yu-mi, a senior researcher at the Capital Market Research Institute, noted that “the number of registered pseudo-investment advisory firms has increased significantly as sales channels have been mainly online.”

She added that this shift has also expanded “the possibility of detecting illegal and unsound acts.” However, she stressed that detection alone does not protect investors from harm. A structured oversight system covering both finfluencers and the institutions working with them is still needed.

Ahn further stated that “considering the ever-increasing influence and risk of pininfluencers, a strong management system such as pre-monitoring and post-sanctions by financial authorities is required.”

She also called for financial authorities to “continuously monitor finfluencies and financial institutions that use them.” On top of that, she recommended “the establishment of additional rules to be followed when providing financial information through social media.”

Without formal rules in place, the gap between influencer reach and regulatory oversight will only continue to widen.

South Korea’s proposal reflects a broader shift in how governments are responding to crypto finfluencer activity. As virtual asset markets grow, so does the need for rules that protect investors from undisclosed conflicts of interest.