FSC chief vows to rationalize cryptocurrency market
FSC chief Koh Seung-beom is seen attending a weekly on-and-off Cabinet meeting at the Central Government Complex, downtown Seoul, Tuesday. Yonhap
By Kim Yoo-chul
Financial Service Commission (FSC) Chairman Koh Seung-beom has reiterated his rather hawkish stance regarding the validity of crypto assets.
Koh, on his first day as the commission chief, Tuesday said with regard to crypto assets, “this is not an issue that can be avoided or delayed. It's quite necessary to minimize the estimated impact on the market players invested in cryptocurrencies. FSC will try to share any updates on the matter with the market.”
President Moon Jae-in approved Koh to lead the FSC, the country's top financial policy regulator. Koh, a former member of the Bank of Korea (BOK)'s monetary policy board, was confirmed in the National Assembly's confirmation hearing last week.
Koh's assessment of cryptocurrencies is in sync with the regulator's aim to rationalize the cryptocurrency market, as both the BOK and FSC don't view crypto-assets as financial assets, since the value of many crypto-assets isn't tied to tangible assets.
Despite their recent soaring prices, cryptocurrencies have been accused of being in a possible “pricing bubble,” which presents a core dilemma in terms of regulatory oversight. Therefore, the perception of the role of crypto-assets as a credible investment asset class isn't that strong from the viewpoints of the BOK and FSC.
On a related note, the country's top cryptocurrency operator, Upbit, submitted its business reports to the Korea Financial Intelligence Unit (FIU), the umbrella unit of the FSC, after the regulator earlier required all cryptocurrency trading platforms to register businesses as digital asset service providers before Sept. 24 or to face an outright ban on operations in the country.
Not surprisingly, the FSC as the chief regulator will focus on executing all policy cards available to eradicate all “fear factors” from the issue of Korea's snowballing total household debt.
“FSC's policy focus is how to stabilize the financial market and how to ensure that soaring total household debt does not hurt the economy in terms of its stability,” he said, adding that excessive debt was the hidden factor that resulted in major financial crises in the past and elsewhere.
Additional measures to curb rising total household debt are ready, he stressed. “The FSC is set to decide on whether to extend the grace period for loan repayments for SMEs ― who have been hit hard by the continued spread of the coronavirus via the Delta variant ― before the Chuseok holidays.”
The country's total household debt has been worsening since the beginning of the pandemic, with the spike in borrowing for loans, to cover stalling wages and to invest in the booming stock market.
“Household credit” is a Korean term for the total amount of debt held by all households in the country, including mortgage and credit card debt, as well as loans taken out at conventional financial institutions and credit purchases that have not yet been paid in full.
The country's household credit grew at a faster pace in the second quarter, as non-banking financial firms offered more loans. Household credit in Korea reached a record high of 1,805.9 trillion won ($1.54 trillion) as of June, up 41.2 trillion won from three months earlier, according to BOK data.
Korea's households are among the world's most heavily indebted, with the average household debt comprising 170 percent of the average annual household income, according to data from the financial authorities.