As previously noted on Crypto Traders Pro, the adoption of crypto and blockchain in South Korea is in many ways significantly more developed than that even in North American and European economies. A huge proportion of Korean professionals have holdings in crypto, and despite the volatility of crypto markets, digital assets are typically considered to be a sound investment. But a series of high-profile hacks on Korean exchanges combined with uncertainty around crypto regulation in the tiny Asian country have left traders with doubts regarding the future of the sector. No longer is there a “kimchi premium” making digital assets more expensive on Korean exchanges, and it has become increasingly clear that government oversight may be required to re-enforce the legitimacy of crypto platforms in the country. So recent comments by the Korean government which demonstrate their optimism should be taken as a positive sign, both for local residents and the markets more broadly.
Korea’s Financial Services Commission (FSC) announced a new regulatory framework in June. The new cryptocurrency regulation bill, which is expected to be passed soon, will grant the FSC and Korea Financial Intelligence Unit (KFIU) the same rights with regards to the oversight and regulation of cryptocurrency exchanges and institutions as they enforce over banks and financial services institutions. This new level of regulatory oversight will require a high degree of transparency over internal management structures and security systems, and will demand that exchanges meet know-your-customer and anti-money laundering (AML) regulations.
It is expected, furthermore, that the KFIU will maintain close scrutiny of crypto trading and transactions to mitigate risk and reduce the potential for fraud and criminal activity. Once regulatory mechanisms are in place, there are in addition calls for mandatory insurance for crypto exchanges to reduce traders’ risk in the instance of security breaches. As the broader crypto sector tries to find a firm footing for the next stage of development, these are welcome signs that the Korean government are stepping up to support the infrastructure of this still nascent industry.
