South Korea Reclaims Its Moderate Stance as FSS Chief Goes Easy on Cryptocurrency

The South Korean president, Moon Jae-in, has appointed an experienced reformist as the new Financial Supervisory Service (FSS) Governor. Moon approved Yoon, a non-bureaucrat, as the new chief in a move that comes with the given softening of the country’s major financial regulator towards cryptocurrencies.

Modern and progressive Yoon has already stated that the agency will consider easing its stance towards cryptocurrencies. The country had to face an unusually large number of pensioners investing limited savings in digital currencies, something that has troubled the regulator during 2017 and 2018.

First, Do No Harm

Although Yoon will only officially start his role as FSS boss on May 8, 2018, his appointment is allowing moderates within the agency to emerge and be identified. A collective of Korean lawmakers is also working on legislation that will legalize ICOs in the enthusiastic nation.

Previously largely banned by what many saw as an overreaction to the cryptosphere, only ICOs that met certain, limited conditions were allowed to take place. Now, with a renewed appreciation of the value of blockchain and the relatively innocuous nature of altcoins, laws are set to change once again.

Yoon said that “Regarding cryptocurrencies, there are some positive aspects”. The Financial Services Commission (FSC) governs the FSS and had nominated Yoon for the post.

The FSS will collaborate with the FSC when an inspection of policies and financial institutions has different configurations associated with different scopes. FSC inspects policies, while the FSS examines and supervises financial institutions but with the oversight of the FSC,” Yoon explained.

When pressed for how exactly the agencies will collaborate to make sense out which approach to take and which laws to apply to companies like digital coin exchanges, Yoon wouldn’t elaborate, but said that “There are a lot of issues that need to be addressed and reviewed. We can figure them out, but gradually.”

The Right Man For The Job

A Bithumb spokesperson said that “Markets expected the introduction of the real-name registration system would have been helpful to revive trading, but these efforts failed as local banks were reluctant to invite more crypto traders.” They were referring to recent FSC legislation that stipulated that cryptocurrency exchange operators employ a real-name verification process in order to continue trading.

Under the law, a retail investor had to convert their virtual bank account to a real-name bank account in order to be allowed to continue trading. Deposits and withdrawals were thus also allowed only between an individual’s real-world bank account and the same-name crypto-exchange accounts held at the same bank. “The daily transactions of cryptocurrencies plummeted to around 400 billion won from 4 trillion won before the financial regulators implemented [that] regulation,” said Bithumb’s VP, Lee Jeong-ah. “We don’t oppose regulations. But you can’t entirely kill the markets by simply imposing regulations.”

Bithumb is one of the four major exchanges in South Korea, joining Coinone, Upbit and Korbit in the leading crew. Cryptocurrency markets in Korea were and can still be intermittently frozen as regulators scrutinize and verify investors’ historical transactions Since Yoon is known for being an “activist and reformist,” his impact on such unwieldy legislation is eagerly anticipated by exchanges and users. “What the new FSS chief should think about is how the regulators should provide remedies to help crypto trading and blockchain technology get better,” an Upbit official said. Bitcoin continues its slow climb back to greater value, currently trading at $9298.01.

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