Korea’s New Financial Watchdog Chief Envisions Stable, Less Speculative Crypto Market

The new head of Korea’s financial watchdog has doubled down on the anticipated effort of his agency considering a lenient approach to cryptocurrency trading.

Yoon Suk-heun, an academic and reformist who was – this week – appointed as the governor of Korea’s Financial Supervisory Service (FSS), has had more to say about his own stance on the government’s regulatory moves that have largely dented the domestic crypto trading industry.

After assuming his position as the top dog in Korea’s financial watchdog on Tuesday, the governor was asked to elaborate on the agency’s possible shift in stance to ease rules on cryptocurrency trading and domestic exchanges. “Regarding cryptocurrencies, there are some positive aspects,” Yoon said Monday before taking up the post, hinting at relaxing some regulatory demands on the sector.

As the Korea Times reports, the subject was revisited on Tuesday when the new FSS governor officially took the top seat. Asked if authorities would soften regulations, Yoon stated:

“The government should make it clear what needs to be regulated and what things need to be lifted. Once these plans are implemented, then the market will be stabilized as cryptocurrencies will become less speculative.”

Notably, the governor added the FSS would reveal updates on crypto regulations once authorities reach a consensus on the best way forward.

Curiously, Yoon – a former Seoul National University visiting professor who is commonly seen as a reformist and proponent of regulatory clarity for stable financial markets – added that cryptocurrencies, despite their volatility, are to be seen as financial assets.

He said:

“When you see ups and downs of the prices of cryptocurrencies, then it’s understandable that cryptocurrencies are not currencies, but it’s hard to agree with opinions that cryptocurrencies are not financial assets.”
The remarks follow the agency’s blanket ban on initial coin offerings (ICOs) domestically in September, a curb that remains in effect to this day. In January, the Financial Services Commission (FSC) – the regulator which oversees and directs the FSS – enforced a ban on anonymous cryptocurrency trading by mandating the use of real-name matching accounts at crypto exchanges and the corresponding bank providing services to them.

The move has had a significant crippling impact on trading, with local banks reluctant to invite crypto traders according to one official from Bithumb, a major Korean exchange.

Indeed, Yoon passionately called for the FSS to “have independence” to carry out its role in being a watchdog and supervising institutions away from the influence of the FSC or other government agencies. While assuming his position as governor, Yoon reportedly asked the government – repeatedly – to separate the FSS from the FSC to allow the FSS handle inspections while insisting the FSC should only be in charge of handling of financial policies.

In his speech after turning governor, Yoon reportedly said:

“The FSS should remain independent from external influence or forces in order to perform things related to the inspection of the affairs of financial institutions, inspections and policies. These are the given roles the FSS has to meet as the financial regulator.”

While stating that the FSS would ‘openly collaborate’ with the FSC, the two agencies have markedly different agendas and scopes, Yoon added.