South Korean Financial Regulators Criticized
South Korea’s financial regulators are facing criticism for what has been termed “baby steps” in the realm of cryptocurrency regulation. While counterparts in the United States are making rapid progress, South Korean authorities are accused of failing to organize their crypto initiatives properly.
Lack of Organization at the Financial Services Commission (FSC)
According to a report by News Tomato, there is no dedicated organization for cryptoassets at the Financial Services Commission (FSC). The Financial Supervisory Service (FSS) is at a nascent level, with dedicated crypto units only recently formed.
Contrasting Approaches: US vs. South Korea
The report draws attention to the stark contrast in approaches between the United States and South Korea. While US regulators actively foster the cryptocurrency market, South Korean regulators face criticism for their slow progress.
Calls for a Dedicated Crypto Department
The report quotes voices within the industry calling for the establishment of a new dedicated department at the FSC to address crypto-related matters. However, an FSC official admitted that such a decision requires approval from the Ministry of Public Administration and Security.
New South Korean Crypto Units Launched
In an attempt to address the criticisms, the FSS launched two dedicated crypto units on January 9: the Virtual Asset Supervision Bureau and the Virtual Asset Investigation Bureau. While considered a significant first step, critics argue that this move is somewhat late in the game.
Challenges and Criticisms
Despite the launch of these new units, industry observers remain critical of the financial authorities’ preparations. Some argue that there has been no significant response since an emergency meeting in 2017.
Issues Faced by New Crypto Teams
The FSS’ new units, consisting of six divisions and 33 staff members, have already issued warnings about cases involving bogus crypto exchanges. Investors have reportedly faced difficulties withdrawing funds from unregistered platforms.
Legislation and Future Plans
New Crypto Law Coming in July
A new crypto-specific law is set to come into force in July. However, the government acknowledges that it may not be comprehensive enough, leading lawmakers to consider a second bill.
Challenges in Legislative Progress
Lawmakers are expected to start work on the second bill, but no significant progress is anticipated before the parliamentary elections on April 10. Talks on whether Seoul should follow Washington in approving Bitcoin spot ETFs are also on hold until after the elections.
Regulatory Constraints
Financial authorities emphasize that they cannot act outside the boundaries of the law. An FSS official stated that there are limits to what can be done without legislative changes.
In conclusion, South Korea is grappling with the challenges of catching up with the rapidly evolving landscape of cryptocurrency regulation. As the nation works to establish dedicated units and pass new legislation, the slow pace draws concerns and criticisms from various quarters within the industry. The upcoming months will likely be crucial in determining South Korea’s ability to keep up with international standards in the ever-expanding crypto space.
