South Korean Regulators Lagging Behind in Crypto Regulation
According to a report by South Korean media outlet News Tomato, the country’s financial regulators are slow to organize their approach to cryptoassets. The Financial Services Commission (FSC) lacks a dedicated department for cryptocurrencies, and the Financial Supervisory Service (FSS) only recently formed crypto units. In contrast, US regulators are actively supporting the cryptocurrency market, as evidenced by the approval of Bitcoin spot ETFs. However, South Korean regulators have responded by cracking down on local firms offering crypto ETF access abroad. Calls for a new dedicated department at the FSC have been met with the need for approval from the Ministry of Public Administration and Security.
New Crypto Units Established in South Korea
The FSS launched two dedicated crypto units, the Virtual Asset Supervision Bureau and the Virtual Asset Investigation Bureau, on January 9. This move is considered a significant step forward in regulating cryptocurrencies. However, critics argue that the FSS is late to the game compared to regulators in other countries. The new units consist of six divisions and 33 staff members, including IT experts, lawyers, and accountancy professionals. The FSS spokesperson acknowledged that self-regulation measures may be necessary due to the imperfect legal system governing cryptoassets.
Challenges Faced by South Korean Crypto Regulators
The new FSS crypto teams are already facing challenges such as warning investors about bogus crypto exchanges where funds cannot be withdrawn. Critics claim that financial authorities in South Korea have been slow to respond to the growing crypto market. In 2017, emergency measures were called for due to an “overheated” market, but little progress has been made since then. A new crypto-specific law is set to take effect in July, but lawmakers are expected to work on a second bill as the first one is not comprehensive enough. Talks on approving Bitcoin spot ETFs have also been delayed until after parliamentary elections in April.
Hot Take: South Korean Authorities Criticized for Slow Crypto Regulation
South Korea’s financial regulators are facing criticism for their slow progress in regulating cryptocurrencies. While US regulators are actively fostering the crypto market, South Korean authorities are yet to establish a dedicated department for cryptoassets. The recent formation of crypto units at the FSS is seen as a positive step, but critics argue that it is late compared to other countries. The challenges faced by the new FSS crypto teams, including warning investors about fraudulent exchanges, highlight the need for stronger regulation. With a new crypto-specific law set to come into force in July, South Korean lawmakers must work on comprehensive legislation to keep up with global standards.
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