The Bank of Korea (BoK), South Korea’s central bank, has obtained the authority to access cryptocurrency transaction data from exchanges operating within the country. This development comes as the nation’s financial institutions grapple with cryptocurrency regulations and jurisdictional challenges.
BoK and FSC in Jurisdictional Competition
South Korea’s financial regulator, the Financial Services Commission (FSC), has been embroiled in a power struggle with the Bank of Korea over who should regulate the burgeoning cryptocurrency sector. Despite this ongoing battle, the FSC retains ultimate control over digital asset regulation in the country.
The Bank of Korea has expressed apprehension regarding the potential financial stability risks of stablecoins. However, with its newly-granted power to request transaction data from cryptocurrency exchanges, the central bank will be better positioned to scrutinize and address these concerns.
Last week, an official from the National Assembly’s Political Affairs Committee confirmed the Bank of Korea’s right to request data from digital currency operators. The Financial Services Commission is expected to articulate its official stance at a subcommittee meeting scheduled for April 25.
Accelerating Virtual Asset Legislation
The upcoming meeting is anticipated to expedite the implementation of South Korea‘s virtual asset laws, as The Korea Herald reports. Democratic Party lawmaker Kim Han-gyu, the individual behind the country’s Crypto Assets Act, has remarked on the FSC’s reluctance to include the central bank’s data request rights in the bill, stating, “The Financial Services Commission admits that the Bank of Korea must have the right to request data, but it is refusing to include it in the bill.”
The South Korean government’s efforts to advance cryptocurrency legislation have been hampered by the ongoing dispute between the Bank of Korea and the FSC over who should oversee the sector. The FSC has cautioned that granting regulatory authority to the central bank may inadvertently signal that digital assets hold the same status as traditional financial instruments, a notion the FSC chair has previously refuted.
The two institutions have been locked in a stalemate over cryptocurrency regulations for the past three years. The Political Affairs Committee, a division of South Korea’s State Affairs Commission, has accused the FSC of attempting to monopolize its position as the sole cryptocurrency regulator.
Joint Investigative Powers for BoK and FSC
The recent development has granted both the Bank of Korea and the Financial Services Commission the ability to investigate cryptocurrency operators and obtain full access to transaction data. The FSC has actively enforced actions against cryptocurrency companies and shares the United States Securities and Exchange Commission’s view that crypto assets are securities.
South Korea’s Financial Supervisory Service, under the FSC, unveiled an investigative body called the Digital Assets Committee mid-2022. This committee’s establishment further highlights the country’s growing focus on regulating and monitoring the digital asset landscape.
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