South Korea will continue to take a cautious approach to regulating cryptocurrencies

Candidate for the post of Chairman of the South Korean Financial Services Commission (FSC) Yoon Seon-Soo confirmed that he will adhere to the agency's current approach to regulating the cryptocurrency space.

Yoon provided his comments in writing to the parliamentary committee on Monday in advance of the hearing on Thursday, which will consider his approval for the post. It follows from them that South Korea will remain uncertain for some time on the issue of regulation of cryptocurrencies, and exchanges will continue to operate outside the legal framework.

At the same time, Yoon stressed that the draft laws related to the cryptocurrencies, which are still under consideration by the National Assembly, should be approved as soon as possible. These include amendments to the law on "Specialized Financial Information", which focuses on the issues of accountability, transparency and anti-money laundering.

Yoon also drew attention to the hype around cryptocurrencies, which reached its peak in January 2018, the excess of Bitcoin on local stock exchanges over the world and the potential risks of digital assets. He was skeptical about the possibility of integrating cryptocurrencies into the current financial system, noting that a solid legal framework must be developed before this can happen.

"The introduction of virtual currencies into the institutional finance sector can cause side effects, such as a resurgence of speculative mania and money laundering problems," he wrote.

From Yoon's brief comments, the local media concluded that FSC will continue to implement the policy approved by the previous chairman, who initiated the ban on initial placements of coins (ICO) and advocated for stricter banking rules for cryptocurrency exchanges.

His methods have led to the fact that currently only four exchanges in South Korea have access to full banking services, while the rest are forced to look for workarounds using corporate accounts. It is noted that this loophole could be closed at any time, making it impossible for 97% of local exchanges to continue their work. In addition, hostile regulation has resulted in local cryptocurrency projects going underground and offshore jurisdictions.