Legislations and regulations are crucial for the establishment of the crypto ecosystem. In addition to this, authorities for observation of cryptocurrencies and related aspects are critical for its growth and development. Countries across the globe are extensively participating in drafting laws and establishing authorities for keeping the ecosystem under observation.For example, recently the European Union passed legislation for regulation of cryptocurrencies.
In recent times, South Asian countries are also drafting laws for legalizing and regulating crypto assets. It is interesting to note that South Korea is drafting laws for regulation of virtual assets. Recently, with discussions ongoing in the parliament related to regulations, Bank of Korea is planning to be given the right to investigate virtual asset operators. It is important to note that the Bank was competing with the Financial Services Commission over this.
According to an official from the National Assembly’s Political Affairs Committee it was mentioned that a plan to specify the Bank of Korea’s right to request data submission is being pursued in the Virtual Asset Act. It is known that the Financial Services Commission announced that it would pursue such a plan while the National Assembly was collecting government opinions.
Earlier as well the National Assembly aimed to deal with virtual assets-related bills but problems rose in drafting of the regulations. Critically, here the differences between two institutions that included the Bank of Korea and the Financial Services Commission led to delay.
The Bank of Korea has expressed its position by explaining that the bank should have the right to request the submission of data on virtual asset operators and issuers. In particular, in the case of stablecoins and argued that regulation by monetary authorities was necessary because of their strong nature of currency.
Against this, the Financial Services Commission took the opposite position. It highlighted that if the Bank of Korea is involved in the discussion of the Virtual Asset Act, it could be the same as acknowledging the monetary nature of virtual assets.
Further, regarding the inspection right of the Financial Supervisory Service, it mentioned that the authority have drawn a line, and said, “If the Financial Supervisory Service’s inspection right is specified in the Virtual Asset Act, it will cause the general public to misunderstand that the virtual asset market/business operator is treated the same as the financial market/institution.”
Recently, however, the Financial Services Commission took a step back and accepted the Bank of Korea’s right to request data submission. It is important to note that the South Korean parliament has commenced its discussion for robust and wide-ranging crypto regulations in March 2023. The government is prioritizing investor protection and the issuance and disclosure of assets.
