Crypto Firms Investigation: South Korean Central Bank Given Authority

Apr. 24, 2023
Crypto Firms Investigation: South Korean Central Bank Given Authority

The government has granted the Bank of Korea (BoK) the power to investigate crypto service operators and issuers as part of discussions surrounding virtual asset legislation in the country.

The central bank of South Korea can now access transaction data from crypto exchanges as it seeks to ramp up scrutiny of cryptocurrency-related businesses.

The Korea Herald, a local news source, announced on April 20 that the Bank of Korea (BoK) would have the authority to look into those who run enterprises connected to cryptocurrencies.

However, the Financial Services Commission (FSC) will ultimately have the last say in how the digital asset market is regulated. Moreover, the BoK has expressed concerns about the threats stablecoins pose to financial stability, giving them the power to ask digital currency operators for information.

The subcommittee meeting on April 25 will present the FSC’s formal stance on the subject. South Korea anticipates that this will hasten the implementation of their virtual asset rules.

Kim Han-gyu, a Democratic Party lawmaker, proposed South Korea’s Crypto Assets Act. He commented on the situation, stating that the Bank of Korea should have the power to seek data. Still, the Financial Services Commission has refused to include this right in the legislation.

The South Korean government has been working to pass a crypto law. However, there have been endless disputes over who should regulate it between the central bank and the FSC.

Furthermore, the FSC has already warned that if the central bank regulates cryptocurrencies. It will signal that digital assets are on par with conventional financial instruments.

The two organizations have been in conflict over legislation governing cryptocurrency for the last three years. The State Affairs Commission’s Political Affairs Committee accused the FSC of attempting to monopolize cryptocurrency regulation.

FSC Enforcement Actions Against Crypto Companies

The FSC, or Financial Services Commission, has stepped up its enforcement actions against cryptocurrency businesses. They share the same view as the US Securities and Exchange Commission in recognizing certain types of crypto assets as securities.

Traditional securities firms are holding cryptocurrency businesses to the same regulatory standards. In the middle of 2022, the Financial Supervisory Service of South Korea, governed by the FSC, formed the Digital Assets Committee as an inquiry committee.

The BoK’s new power to investigate local crypto firms is the latest development in South Korea’s ongoing crypto regulation discussions. The move will allow for increased scrutiny of cryptocurrency-related businesses, particularly those dealing with stablecoins.

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They have yet to see how the FSC will respond to the Bank of Korea’s new powers. Additionally, it is unclear what impact this will have on the rollout of South Korea’s virtual asset laws.

Rida Fatima

News writer
An ardent wordsmith with a rich five-year background in delving into the realms of finance and cryptocurrencies. Alongside curating captivating blogs, Unique's talents extend to crafting imaginative and engaging content.