South Korea’s FSS Targets January for Digital Asset Legislation Launch

Jimmy Aki
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South Korea’s Financial Supervisory Service (FSS) is ramping up efforts to bring much-needed regulation into the burgeoning crypto space. According to the body’s head, Lee Bok-hyun, crypto asset legislation should come into force by January 2024.

New Standards for Crypto Space

A growing number of world governments are increasingly addressing the challenges of the cryptocurrency market, and South Korea is no exception.

According to local reports, the Financial Supervisory Service (FSS), headed by Lee Bok-hyun, has shifted its focus toward this emerging sector.

In a recent development related to digital asset market regulation, Bok-hyun revealed that the FSS is actively working to introduce cryptocurrency asset legislation by January 2024.

This initiative will involve the establishment of new standards for token and asset listings, internal controls, and the issuance and distribution of airdropped virtual assets.

In addition, the FSS will create a virtual asset market supervision and inspection system to ensure all nascent industry participants adhere to the country’s financial laws.

Bok-hyun noted that these regulations are not being implemented in isolation, and crypto market participants like Upbit, Coinone, Bithumb, and Gopax are involved in ongoing discussions.

This latest round of crypto asset legislation comes after an audit conducted on the FSS on October 17 by the South Korean National Assembly Political Affairs.

During the session, Bok-hyun was questioned on the prevalence of “burger coins” in the South Korean marketplace. Burger coin is a slang used by South Koreans to denote foreign-issued cryptocurrencies trading in their crypto exchanges.

The FSS head has since stated that the legislation passed earlier in June lacked the regulatory detail to address thorny issues in the crypto space. In the then legislation, criminal violations were to be punished.

However, Bok-hyun asserted that it still limited the legislative power of his agency. The forthcoming legislation is meant to serve as a supplement to ensure no cracks are left unattended as the Asian country seeks to embrace the new financial order.

Making a case for the need for stronger supervisory measures, Bok-hyun said that the same screenings relating to the issuance market in the securities sector are lacking in the digital asset trading arena and even across individual exchanges.

Meanwhile, there are ongoing plans across all South Korean law enforcement agencies to launch a joint task force focused on crypto asset criminal activities. This working group of agencies will include the FSS, National Tax Service, Korea Customs Service, amongst others.

EU Investors Still Unprotected

Across the Pacific, the European Commission is trying to carve a less hostile path into full-fledged crypto regulation via the Markets-in Crypto Assets (MiCA) legislation.

In a new official release by the European Securities and Markets Authority (ESMA), investor protection is still miles away from becoming normal standards.

In a release dated October 17, ESMA stated that it might take up to December 2024 before MiCA begins to be adopted across the European crypto landscape.

Based on a grandfathering clause often offered for new financial sectors, an extra 18-month period can be offered to crypto asset service providers (CASPs) to help them transition. This would then push the timeframe for MiCA’s full launch to July 1, 2026.

Furthermore, ESMA stated that crypto investors who interface with blockchain-based digital assets should be ready to lose their funds due to the lack of EU-level regulatory coverage.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.