Calls grow for establishment of state agency overseeing cryptocurrency trading

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By Lee Min-hyung

Calls are growing for the establishment of a government organization to oversee the cryptocurrency market.

The Financial Services Commission (FSC) has so far functioned as a de facto control tower over the industry, but has been criticized for relying solely on tough regulations to do the job. As a result, the industry has requested the incoming administration led by President-elect Yoon Suk-yeol to foster more balanced policies by setting up a special government agency.

The presidential transition committee is also considering establishing such an organization tasked with remedying ambiguous laws concerning the emerging crypocurrency industry.

Discussions are underway at a virtual asset special committee in the main opposition People Power Party, to which Yoon belongs. Even if nothing specific has been confirmed by the presidential transition team, there stands a possibility of such a government authority being launched after Yoon is inaugurated in May.

“We need to mitigate public confusion over a series of cryptocurrency organizations and associations springing up here,” Hwang Seok-jin, a professor at Dongguk University, said at a recent seminar. “The dominant market view is that (the incoming administration) should establish a ministry-level authority for the prosperity of the industry.”

This stands in line with Yoon's campaign pledges which include deregulating the market and taking more proactive steps for the growth of the industry.

PPP Rep. Yoon Chang-hyun, who serves as the head of the virtual asset committee, also underlined the need to build a clear legal system for Korea to take a leap forward in the global digital asset market.

“After the new government is inaugurated, we are going to hold more concrete discussions for digital asset-related legislation,” he said. “The upcoming legislation will help pave the way for the nation's digital asset industry to become a future growth engine, thereby building a more fair trading system here.”

Officials from the industry also said that the launch of such an authority would definitely help reduce market confusion and help Korea enhance its standing in the global cryptocurrency industry.

“For now, most cryptocurrency exchanges face a tough time attracting foreign capital due to regulatory hurdles,” an industry source said. “This goes against the global trend. Even if Korea's cryptocurrency trading volume is in the upper ranks in the global market, anti-market policies from the incumbent administration blocked foreign capital inflow.”

Another source also advised the incoming administration to pay more attention to the industry, at a time when a growing number of global companies are investing in the industry abroad.

“A number of globally leading tech and financial firms are increasing their investments in the area, and this is also the case for Korea's major conglomerates,” the source said. “Regulation is necessary, but of much more importance is to change the lingering negative perceptions on the industry.”