Key Takeaways
- BoK has been clashing with Financial Services Commission over crypto jurisdiction in the country
- FSC is expected to receive the authority to investigate unfair transactions.
The Bank of Korea (BoK) has received approval to intensify its monitoring of cryptocurrency service operators and issuers as discussions on virtual asset legislation continue in South Korea. The Korea Herald reported on April 20 that the BoK had been granted the power to investigate cryptocurrency-related businesses.
The BoK has been in competition with the Financial Services Commission (FSC), the country’s financial regulator, over crypto jurisdiction. However, the FSC will ultimately be responsible for governing digital asset regulation. Despite this, the BoK has expressed concerns over financial stability risks posed by stablecoins, and can now request transaction data from crypto exchanges.
The National Assembly’s Political Affairs Committee confirmed last week that the BoK has the right to request data from digital currency operators. The FSC will express its official stance on the matter at a subcommittee meeting on April 25, which is expected to accelerate the rollout of South Korea’s virtual asset laws.
The FSC has recently dropped its opposition to the BoK’s request for the right to investigate virtual assets, marking a significant development in the South Korean cryptocurrency market. The battle between the two institutions for control over the virtual asset market has reached a turning point, with the central bank’s demands for the authority to investigate digital assets now more likely to be granted.
The FSC’s decision to drop its opposition follows after subcommittee of the Korean Parliament’s Political Affairs Committee accused the regulatory body of seeking a monopoly on virtual asset regulation. The National Assembly’s announcement that it would also include the BoK’s right to request data in the upcoming Virtual Assets Act further solidified the central bank’s position.
The FSC and BoK have constantly been clashing over which institution should oversee payments and settlements in the virtual asset market. While the central bank has maintained that it should have the authority to investigate virtual assets due to the potential risks they pose to financial stability, the FSC is expected to receive the authority to investigate unfair transactions.
While most proposed bills currently grant the FSC the authority to investigate unfair transactions, they entrust the scope of work to the Financial Supervisory Service. If both the BoK and the Financial Supervisory Service are granted investigative authority, it will usher in a new era of virtual asset regulation in the country.
Lawmaker Kim Han-gyu, who proposed the Crypto Assets Act, noted that the FSC recognized the necessity of granting the central bank the right to request data but refused to include it in the bill. Irrespective of conceding to the Bank of Korea’s demands, the FSC will still be granted the authority to investigate virtual assets, highlighting the need for collaboration between the two institutions in regulating the virtual asset market.
