FSS won't regulate Bitcoin trading
By Nam Hyun-woo
Financial Supervisory Service (FSS) Governor Choe Heung-sik said Thursday that the watchdog is not considering digital tokens, such as Bitcoin, as legitimate currency and thus has no plan to supervise transactions of the cryptocurrency.
Choe, who has been heading the watchdog since September, told reporters that the government believes that digital tokens do not function as a payment tool and remain as subjects of speculation. Hence, the FSS does not recognize cryptocurrency trading as financial products or service.
“It is the same with the fact that we don’t regulate or supervise casinos,” Choe said during a luncheon with reporters. “Though there could be concerns on excessive gambling, that does not provide grounds for the FSS to control casino practices.”
“Though we are monitoring the practice of cryptocurrency trading, we don’t have plans right now to directly supervise exchanges. Supervision will come only after the legal recognition of digital tokens as a legitimate currency.”
Concerns over digital token trading have been rising after the server of Bithumb, one of the largest exchanges in the world operating in Korea, went out of action earlier this month.
During the one-and-a-half hour malfunction, many investors claimed they suffered losses up to hundreds of millions of won, with the exchange still calculating the exact amount of losses occurring during the time.
More than 6,000 people subscribed to an internet forum preparing for a suit against Bithumb, with more than 1,500 actually having joined a joint suit against the company.
Amid the turmoil, calls have been growing that virtual currency exchanges should be better regulated, given the daily average volume of digital token trading in Korea has reached 2 trillion won ($1.4 billion). According to Coinhills, a digital currency statistics provider, Korea’s won is the third most traded national currency following the Japanese yen and the U.S. dollar.
On top of the rich investors, the country has no financial regulation over digital currency trading, which makes it an attractive market with a series of foreign exchanges already having entered the nation.
Japan-based Bitpoint has opened branch in Korea earlier this month and will begin its services next week. China-based OKCoin and Huobi are also preparing to begin service in Korea. Unlike Korea, Japan has tough regulations on exchanges as well as levying taxes on transactions.
During the luncheon, Choe said the impact of the potential U.S. key rate hike on domestic foreign exchange liquidity will be limited, but added that the FSS will keep monitoring the progress closely to prepare for increased volatility following geopolitical risks involving North Korea.
He also pledged that the FSS will make efforts to provide “equal footing and level ground” for foreign financial firms, as well as hearing their inconveniences.