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| Financial Supervisory Service Governor Yoon Suk-heun smiles on the sidelines of his arrival at the Korea Banking Institute building in downtown Seoul last week. President Moon Jae-in approved Yoon, an experienced and reformative non-bureaucrat, as the head of the country's top financial regulator. Yonhap |
By Kim Yoo-chul
New Financial Supervisory Service (FSS) Governor Yoon Suk-heun said the country's top financial regulator will consider relaxing cryptocurrency regulations.
"Regarding cryptocurrencies, there are some positive aspects," Yoon told reporters after President Moon Jae-in approved the nomination of Yoon to lead the government agency, submitted by the Financial Services Commission (FSC). The FSC directs the FSS.
"The FSS will collaborate with the FSC when an inspection on policies and financial institutions has different configurations associated with different scopes. FSC inspects policies, while the FSS examines and supervises financial institutions but with the oversight of the FSC," the new FSS head said.
In a question about details of which methodologies the FSS is considering applying to the domestic cryptocurrency exchanges, Yoon declined to elaborate, only saying, "There are a lot of issues that need to be addressed and reviewed. We can figure them out but gradually."
He said better regulation "would produce" a more stable financial system where related services and products would be more likely to make them serviceable, and that would further improve the system.
As Yoon is known as an "activist and reformist," any subtle changes in cryptocurrency trading would have a favorable impact on the industry.
Earlier, the FSC mandated that cryptocurrency traders pass a real-name identification checking process. Under the rule, retail investors have to convert their virtual bank accounts to real-name bank accounts to continue trading. That also means deposits and withdrawals will only be allowed between real-name bank accounts and matching crypto-exchange accounts opened at the same bank.
Cryptocurrency markets were frozen as the rule also gave the FSS and FSC a "free pass," allowing the regulators to check the history of transactions by investors, if they want.
For example, the closing price of Bitcoin, the most popular crypto asset in total market value, was 10.06 million won last week, according to data provided by Bithumb, the country's top cryptocurrency exchange operator. The price of Bitcoin peaked at 25.98 million won on Jan. 6.
"Markets expected the introduction of the real-name registration system would have been helpful to revive trading, but these efforts failed as local banks were reluctant to invite more crypto traders," a Bithumb official said. The country's four major cryptocurrency exchange operators including Upbit, Coinone and Korbit transferred virtual accounts to real-name-based accounts.
The real-name system also excluded juveniles or non-resident foreigners from the market, and prevents money laundering and fraud. It could also serve a database to help impost transaction-related taxes on exchanges.
"The daily transactions of cryptocurrencies plummeted to around 400 billion won from 4 trillion won before the financial regulators implement the new regulation," said Lee Jeong-ah, vice president of Bithumb.
A group of Korean lawmakers is working on a bill to legalize initial coin offerings (ICOs), which were also banned by the regulators, except ones that meet certain conditions under their supervision.
"We don't oppose regulations. But you can't entirely kill the markets by simply imposing regulations. What the new FSS chief should think about is how the regulators should provide remedies to help crypto trading and blockchain technology get better," an Upbit official said.
Yoon will officially start his work as FSS chief beginning May 8 and he is planning to hold a press conference with local and overseas media.
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