In essence, the central bank of South Korea will share investigative powers with the Financial Services Commission (FSC). This boost in authority is part of the government’s broader plan to crack down on the operation of bad actors in the industry. According to coingeek.com, the Bank of Korea (BoK) will take a closer look at stablecoins and their issuers in South Korea.
The BoK is concerned that stablecoins and their functions could have a negative impact on the country’s financial system. Regulating stablecoin issuers is in line with the bank’s duty to uphold financial stability, as stablecoins operate as currency.
The BoK and FSC have been at odds when it comes to regulating the digital currency in South Korea for a few years. The FSC argues that giving the BoK regulatory powers over digital assets is basically conferring monetary value to the asset class. The BoK believes that the FSC has been attempting to gain a regulatory power monopoly over the digital currency industry.
A tighter regulatory landscape in South Korea
Since the fall of Terra in 2021, authorities in South Korea are working to implement a tighter regulatory regime for the crypto industry. In the future, the country plans to release a comprehensive law regime that will create a new licensing framework for service providers and give broader investigative powers to regulators.
According to decrypt.co, in June 2022, the South Korean government revealed its plans to launch a Digital Assets Committee to oversee crypto exchanges. The Digital Assets Committee can make policy recommendations, including criteria for new cryptocurrencies to be listed on exchanges, a schedule for ICOs (initial coin offerings), and enforce investor protections ahead of the enactment of a Digital Asset Basic Act (DABA).
In its overview of crypto regulation in South Korea, cointelegraph.com emphasised that South Korea has become a significant player in adopting blockchain and cryptocurrencies in the Asian continent. However, the growing popularity of cryptocurrencies has put the industry under increased public scrutiny. South Korea has taken a proactive approach to digital assets regulation, with several laws and regulations designed to promote the secure operation of the cryptocurrency market in South Korea.
South Korea aims to roll out new and comprehensive cryptocurrency legislation in 2023 with goals to further institutionalise the sector by 2024. To put the country’s regulatory patchwork on cryptocurrencies on the right track, the National Assembly is debating nearly twenty separate crypto-related proposals.
