In a significant development for the South Korean cryptocurrency market, the Bank of Korea (BOK) is set to take the lead in investigating virtual assets after the Financial Services Commission (FSC) withdrew its opposition to the move.
This change of heart by the FSC comes amid accusations that the regulatory body was seeking to position itself as the sole authority over virtual assets in Korea.
The battle between the BOK and FSC for control over the virtual asset market has reached a turning point, as the central bank’s demands for the right to investigate digital assets are now more likely to be granted.
The FSC’s decision to drop its opposition followed allegations by a subcommittee of the Korean Parliament’s Political Affairs Committee that the regulatory body sought a monopoly on virtual asset regulation.
Bank of Korea set to investigate virtual assets
After weeks of conflict, the FSC has reportedly decided to relinquish its opposition to the BOK’s request for the right to request data submission from virtual asset entities.
This decision came from the Korean National Assembly’s announcement that it would include the BOK’s right to request data in the upcoming Virtual Assets Act.
In the past, the FSC and BOK have repeatedly butted heads over which institution should oversee payments and settlements in the virtual asset market. The central bank insisted that it should have the authority to investigate virtual assets due to the potential risks they pose to financial stability.
The FSC’s decision to step back from its previous position may be attributed to accusations that it sought sole authority over virtual assets and ignored both ruling and opposition parties in its pursuit.
Korean lawmaker Kim Han-gyu raised similar concerns in late March, noting that the FSC recognized the necessity of granting the BOK the right to request data but refused to include it in the bill.
Despite conceding to the central bank’s demands, the FSC is still expected to receive the authority to investigate virtual assets. Numerous proposed bills on virtual assets intend to grant the FSC the power to investigate unfair transactions.
Looking ahead: A new era for virtual asset regulation in Korea
As the National Assembly continues to discuss virtual asset-related laws, it appears that the Bank of Korea will be granted the authority to investigate virtual asset operators.
The Financial Services Commission’s recent acceptance of the BOK’s right to request data submission is a noteworthy shift, considering the two institutions’ history of clashing over regulatory authority in the payment and settlement sector.
Some observers interpret the FSC’s acceptance of the BOK’s request for investigative authority as a response to criticisms of regulatory monopoly.
Meanwhile, the Financial Supervisory Service is also anticipated to obtain the right to investigate virtual assets. Most proposed bills currently grant the FSC the authority to investigate unfair transactions, but entrust the scope of work to the Financial Supervisory Service.
Consequently, it is widely believed that the FSC will accept both the BOK’s and Financial Supervisory Service’s rights to investigate virtual assets, ushering in a new era of virtual asset regulation in Korea.
Jai Hamid(2023.04.23) “Korea central bank takes charge of investigating crypto”
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