South Korean Nominee Official Explains the Cons
RegulationBit News Today2 min read
The nominee for the South Korean Financial Services Commission (FSC) chairman, Koh Seung-beom, took clear stance on cryptocurrencies' legitimacy Wednesday, claiming it difficult for him to recognize the tokens as financial assets or a currency. He noted that major international bodies and many specialists do not consider virtual assets to be financial assets or capable of functioning as money.
Do not recognize crypto as legit assets
Speaking to reporters, he noted that the global community has not yet established a clear concept regarding the characteristics of virtual assets or their potential to serve as currency. He added that he understood groups such as the G20, the IMF, and numerous experts find it hard to treat virtual assets as financial assets or viable currencies.
Aligns crypto speculation with climbing household debt
Meanwhile, Koh warned that persistent growth in household debt could weaken the nation's financial sector and harm the real economy.
According to a Korea Times report, young investors in South Korea turn to crypto in hopes of affording homes amid surging real estate prices.
Data presented by a lawmaker in July showed that Gen Z and millennials held more than half of the country's household debt, driven by investments in crypto and other assets. Following his nomination, Koh pledged that the FSC would address household debt and swings in asset prices.
Top crypto exchanges face Sept. 24 strings attached
Regulators have maintained a hardline stance against crypto. Three major domestic exchanges — Bithumb, Coinone, and Korbit — are facing difficulties meeting regulatory requirements for sustainable operation. Despite obtaining Information Security Management System (ISMS) certifications, the exchanges are struggling to get confirmation from their affiliated banks, as the banks seek to minimize responsibility for misconduct. Upbit remains the sole domestic crypto exchange to have submitted a business details report to the Korea Financial Intelligence Unit (FIU).
The Korea Financial Intelligence Unit (FIU) deadline for exchanges falls on September 24, 2021. The FIU is the agency under the FSC with which crypto businesses must register under the Act on Reporting and Use of Certain Financial Transaction Information. Under the law, certified exchanges must secure confirmation on real-name accounts from affiliated banks and submit their business reports to the FIU by September 24.
Many exchanges risk closure, charges, lack protections for traders
The outlook isn't as good for 42 minor exchanges, as 24 have yet to even apply for the ISMS certification. The government warned that users of exchanges that failed to apply for ISMS certification could incur losses if those platforms shut down. The government announcement came as worries grew that Upbit might monopolize the domestic market. In response, an opposition party's lawmakers visited a local crypto exchange and urged the government to delay regulations for six months.
In June, the FSC instructed banks to treat crypto exchanges as high-risk clients and deny services to non-compliant firms, rules that also cover foreign platforms using the won. Following these strict policies, several overseas exchanges halted Korean credit card payments or dropped Korean won trading pairs. On the other hand, as part of a special crackdown, the government has inspected or arrested 520 people suspected of fraud using virtual assets.
