The South Korean central bank, the Bank of Korea (BOK), will be granted the right to investigate virtual assets after the Financial Services Commission (FSC) dropped its opposition to the move. This decision comes after a subcommittee of the Korean Parliament’s Political Affairs Committee accused the regulator of seeking to make itself the sole regulator of virtual assets. The BOK had insisted on being granted the right to investigate digital assets as it believed that risks from the virtual asset markets ultimately threatened financial stability.
The move to grant the BOK the right to request data submission from virtual asset service providers will be included in the Virtual Assets Act. The FSC had previously clashed with the BOK over which of the two institutions should supervise payments and settlements. As per a local report, the FSC’s decision to drop its opposition came after the Korean National Assembly stated its intention to include the BOK’s right to request data in the proposed legislation.
Despite conceding its long-running fight with the BOK, the FSC will still likely gain the authority to investigate virtual assets. Many of the proposed bills on virtual assets seek to give the regulator the power to investigate “unfair transactions.” This move could bring regulation and oversight to the virtual asset market, which has seen a surge in interest and investment.
However, accusations about the FSC’s monopolistic ambitions and its willingness to disregard both the ruling and opposition parties in its pursuit may have forced the regulator to concede. Earlier in March, Korean lawmaker Kim Han-gyu accused the FSC of acknowledging the need for the BOK’s right to request data while refusing to include it in the bill.
The virtual asset market in South Korea has grown significantly in recent years, with a high demand for cryptocurrencies and other assets. Despite the surge in popularity, there have been concerns about the lack of regulation and oversight in the market. The recent move by the South Korean government to grant authority to both the BOK and FSC to regulate the market could bring more stability and security to the virtual asset space.
The decision to regulate the virtual asset market in South Korea comes at a time when governments worldwide are grappling with the rising popularity of cryptocurrencies and other virtual assets. While some countries have taken a hands-off approach to regulation, others have implemented strict policies to control and monitor the virtual asset market.
The move by South Korea to regulate the virtual asset market could serve as a template for other countries looking to bring oversight and regulation to the virtual asset market. The increasing popularity and interest in cryptocurrencies and other virtual assets have made it imperative for regulators worldwide to introduce frameworks that protect investors and ensure the stability of financial markets.
In conclusion, South Korea’s decision to grant the BOK and FSC the authority to regulate the virtual asset market could bring much-needed oversight and regulation to the market. The move could serve as a model for other countries looking to introduce frameworks that protect investors and ensure the stability of financial markets. With the surge in popularity of virtual assets, it is imperative for regulators to take decisive action to ensure the long-term stability and growth of the market.
