South Korea's Financial Services Commission plans to add narrow exceptions to disqualification rules for major shareholders of virtual-asset service providers, allowing criminal penalties tied to vicarious liability provisions or minor violations to be excluded from eligibility reviews. The proposal, outlined in a written response to the National Assembly's Political Affairs Committee and reported by Newsis on Aug. 10, follows recommendations from the presidential Regulatory Rationalization Committee and will draw on precedents under the Capital Markets Act and the Online Investment-Linked Finance Business Act. The change comes before a revised enforcement decree of the Act on Reporting and Use of Certain Financial Transaction Information takes effect on Aug. 20. The decree adds violations of the Fair Trade Act, the Punishment of Tax Evaders Act and the Act on the Aggravated Punishment of Specific Economic Crimes to the grounds for disqualifying major shareholders, and extends those standards to three-year renewal reviews as well as new registrations. The FSC also said it will seek relief from network separation rules through a regulatory sandbox for financial companies with sufficient security and AI capabilities, review external-network access for activities involving public blockchains, consult on won-based stablecoins under the Digital Asset Act and related laws, and monitor how Upbit's stablecoin fee-waiver policy affects competition. The broader debate remains important because South Korea has not approved any new VASP registration applications since June 2024.