Bank of Korea Edges Closer to Being Able to Investigate Crypto Firms: Report

Korean regulators said they worry it will signal "virtual asset markets and businesses are treated the same as financial markets and institutions."

By Pedro Solimano

The Bank of Korea (Source: Shutterstock)

South Korea’s central bank is a step closer to being granted powers to investigate digital asset platforms, according to a report from South Korean news outlet Herald Business.

In light of the recent scandals within the cryptocurrency space, the country’s National Assembly has been discussing a law that will provide a clearer and broader regulatory framework for the nascent industry.

An official within the government’s Political Affairs Committee told Herald Business that a proposal that would allow the Bank of Korea (BOK) to request documents from digital asset companies has been all but approved.

The Financial Services Commission has been hesitant to allow the BOK’s bid to get more involved in supervising digital asset providers, stating it would be tantamount to acknowledging the monetary nature of cryptocurrencies.

“If the FSS’s (Financial Supervisory Services) inspections are specified in the Virtual Asset Act, it will cause misunderstanding among the general public that virtual asset markets and businesses are treated the same as financial markets and institutions”, was one of the Financial Services Commission’s arguments to denying larger oversight to the country’s central bank, according to a translated version of the report.

The BOK, however, argued they should have the right to request documentation from virtual asset providers and issuers, especially when it comes to stablecoins, due to the monetary aspect of these instruments.

After lengthy discussions between both agencies, these are coming to an end, with the FSC agreeing to the proposal. As a result, it is likely the Virtual Asset Act will pick up speed.

According to Kim Han-kyu, the Democratic Party lawmaker who introduced the crypto bill, the Financial Services Commission has acknowledged the Bank of Korea should have the right to request data, “but refuses to include it in the bill.”

This week, the FSC backtracked on its stance, and accepted the BOK’s right to request documentation.

The National Assembly will now take into consideration the Financial Service Commission’s agreement to investigative powers for the BOK, and continue deliberating the framework for cryptocurrency service providers.