The last four months have been quite torrid for virtual asset traders and service providers in South Korea following the aggressive stance of the Financial Services Commission (FSC). However, it seems that the agency is doing a U-turn and announced that it will promote the use of digital currency and preserve the interest of investors.
During a parliamentary hearing, Kim Joo-hyun, chairman of the FSC, revealed that the financial regulator will support blockchain and intends to do so in collaboration with other national agencies.
“In cooperation with the National Assembly, we will actively support the establishment of a regulatory system for virtual assets that balances innovation with new technologies such as blockchain, consumer protection and financial stability,” he said. said Kim.
The FSC chairman told MPs that the agency is considering overturning its previous ban on banks and other financial institutions from facilitating digital asset transactions. Furthermore, he added that his agency would not seek to enact new regulations for the industry. Instead, it will use existing frameworks to govern the activities of Virtual Asset Service Providers (VASPs).
Far from the actions of the FSC, the South Korean government is reportedly working on comprehensive legislation for the entire industry. The Digital Assets Basic Law (DABA) is expected to come into force in 2023 and is set to become the primary regulation for South Korea’s booming industry. The wording of the bill has been seen as a pro-digital asset, as the country aims to maintain its leading position in its region in terms of adoption and regulation.
“The basic digital asset law is now in the research stage, and we hope to show it,” said Jeong Jae-wook, a member of the ruling party’s virtual asset committee.
A chilling repression
Since the unfortunate collapse of Terra, South Korean regulators have gone on the offensive against digital asset service providers. The FSC declared stiff penalties for exchanges in April for failing to meet new compliance requirements by the September 24 deadline, with palpable fears that dozens of exchanges would shut down.
“Huge losses for investors are expected with the suspension of trading and freezing of assets at many smaller exchanges, as protecting customers is unlikely to be a priority for these exchanges facing impending shutdown,” Cho said. Yeon-haeng, president of the Korea Finance Consumer Federation.
Law enforcement raided the offices of several exchanges in connection with Terra’s collapse, with police raiding the home of Terra co-founder Daniel Shin while the hunt for Do Kwon s intensifies.
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