The South Korean central bank, Bank of Korea (BOK), is set to gain the right to investigate virtual assets after the Financial Services Commission (FSC) dropped its opposition to the move. The FSC had initially opposed the central bank’s bid, accusing it of seeking to become the country’s sole regulator of virtual assets. However, the FSC later dropped the opposition, and it is expected that the BOK will be granted the “right to request data submission.” This decision came after a subcommittee of the Korean Parliament’s Political Affairs Committee accused the FSC of seeking to make itself the sole regulator of virtual assets.
Before the FSC’s concession, the two institutions had repeatedly clashed over which of them should supervise payments and settlements. The central bank had insisted on being granted the right to investigate digital assets, citing the risks emanating from virtual asset markets that ultimately threaten financial stability. The FSC had been accused of having monopolistic ambitions and disregarding both the ruling and opposition parties in its pursuit of being the sole authority on virtual assets.
Despite the FSC’s apparent surrender, it is still expected to gain the right to investigate virtual assets. Several proposed bills on virtual assets seek to give the FSC the authority to investigate “unfair transactions.” The Korean National Assembly is also proceeding with plans to include the BOK’s right to request data in the Virtual Assets Act.
The move by the South Korean government to regulate virtual assets comes amid increased scrutiny of the sector globally. The European Union has proposed new regulations on cryptocurrency as part of its efforts to combat money laundering and terrorist financing. The US Securities and Exchange Commission (SEC) has also been clamping down on unregistered cryptocurrency exchanges and initial coin offerings (ICOs).
Virtual assets have been a subject of debate among regulators globally, with some countries moving to ban them altogether. The Indian government is reportedly considering a complete ban on private cryptocurrencies, while China has already banned cryptocurrency trading and initial coin offerings.
The regulation of virtual assets is a necessary step towards ensuring financial stability and protecting investors. However, it is essential to strike a balance between regulation and innovation to avoid stifling the growth of the sector. The South Korean government’s decision to grant the BOK the right to investigate virtual assets is a positive step towards achieving this balance.
In conclusion, the South Korean government’s decision to allow the BOK to investigate virtual assets is a significant development in the regulation of the sector. The move comes after the FSC dropped its opposition to the central bank’s bid, which had initially been met with resistance. While the FSC is still expected to gain the right to investigate virtual assets, it is essential to strike a balance between regulation and innovation to avoid stifling growth in the sector.