South Korea FSC chairman: ‘Difficult for crypto to replace legal tender’

South Korea urged caution on spot Bitcoin ETFs, prioritizing financial stability and regulatory review.
Kim Byung-hwan emphasizes investor protection over market development in cryptocurrency policies.

As a seasoned financial analyst with extensive experience in the volatile world of cryptocurrencies and securities regulations, I share Kim Byung-hwan’s cautious stance on approving spot Bitcoin ETFs for corporations and institutions in South Korea.

Kim Byung-hwan, a contender for the position of chairman at the Financial Services Commission (FSC), has issued a note of warning regarding the permissibility of corporations investing in cryptocurrencies.

During a hearing at the National Assembly’s Political Affairs Committee on the 22nd of July, Kim made his remarks.

Why is Kim cautious about BTC ETFs?

Kim Byung-hwan, who will take over as the new chairman of the Financial Services Commission (FSC) from Lee Bok-hyun later this summer, responded to a query from a Democratic Party legislator regarding this matter. He made his stance clear on the issue during this exchange.

I approach with care the matter of granting access to [cryptocurrency] platforms for businesses and organizations. Given the volatile nature of the [cryptocurrency] market’s history, it would be prudent for existing regulations to prioritize investor safeguards over market expansion.

As a researcher following the regulatory developments surrounding Bitcoin [BTC] ETFs, I’ve observed the pressure from lawmakers for the Financial Stability Commission (FSC) to approve such products, similar to what has happened in Washington. However, based on my current understanding of the situation, it seems that the regulators are advocating for a more cautious approach.

It’s prudent to hold off on making a decision regarding the introduction of BTC ETFs in South Korea until observing the outcomes of the U.S. actions on this matter. This demonstrates caution and thoughtfulness.

Additionally, he expressed the view that virtual assets should not be categorized as currencies or financial securities.

Virtual assets, which can be created and issued at will by the private sector, cannot fully supplant the function of legally-issued tender by central banks. It’s challenging to consider virtual assets as equivalent to currency.

How will this benefit South Korea?

As a crypto investor, I’ve noticed an intriguing development: just as I was getting used to South Korea’s financial security regulator taking steps to safeguard users dealing with Virtual Asset Service Providers (VASPs) on July 19th, newsworthy events have emerged. It’s a strange turn of events!

As a researcher examining the recent financial developments, I’ve observed an intriguing distinction between South Korea’s financial regulatory actions and those of their international counterparts. Unlike some aggressive regulatory measures implemented elsewhere, South Korea has taken a more nuanced approach.

Due to their belief that virtual assets are unsuitable for serving as base assets in Exchange-Traded Funds (ETFs), there has been a prohibition imposed on the listing of new ETFs and the provision of related brokerage services.

In their belief, the decisions concerning spot ETFs will place a significant emphasis on maintaining financial market stability and considering the possible repercussions for financial institutions.

Officials are placing greater importance on regulatory measures than on market growth. Their priority is safeguarding users and preserving market stability.

It’s important to note that they underline the necessity for more talks about regulations, with a particular focus on virtual asset providers’ entry and business procedures.

That being said, Kim summed it all best when he said,

It’s crucial that we put a strong emphasis on safeguarding users and preserving market stability. Before making any changes, let’s carefully examine the existing regulations governing the entrance and business conduct of virtual asset operators.

2024-07-24 02:15

Why is Kim cautious about BTC ETFs?

How will this benefit South Korea?

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