The central bank of South Korea has been given the green light to ramp up its scrutiny of cryptocurrency service operators and issuers amid further discussions on virtual asset legislation in the country.
On April 20, local media outlet The Korea Herald reported that the Bank of Korea (BoK) will be given the right to investigate operators of cryptocurrency-related businesses.
The South Korean central bank has been competing with the country’s financial regulator, the Financial Services Commission (FSC), over crypto jurisdiction. However, the FSC will have the final say in governing the regulation of the digital asset sector.
The Bank of Korea expressed concerns over financial stability risks from stablecoins and will now be able to request transaction data from crypto exchanges.
The BoK’s right to request data from digital currency operators was confirmed by an official from the National Assembly’s Political Affairs Committee last week. The FSC will express its official position at a subcommittee meeting on April 25.
The meeting will accelerate the rollout of South Korea’s virtual asset laws, according to the report.
Democratic Party lawmaker Kim Han-gyu, who proposed the country’s crypto regulations, the Crypto Assets Act, said: “The Financial Services Commission admits that it is necessary for the Bank of Korea to have the right to request data, but it is refusing to include it in the bill.”
The South Korean government has been trying to push forward crypto legislation but there have been arguments between the central bank and the FSC over who should control it.
However, the FSC warned that if the central bank governs crypto it will send the message that digital assets have the same standing as traditional finance. The FSC chair has previously said that he does not consider crypto a financial asset.
The two institutions have been at loggerheads for the past three years over crypto regulations. The FSC has been accused by officials from the Political Affairs Committee, a division of the country’s State Affairs Commission, of trying to monopolize its position as a crypto regulator.
The latest development means that both the South Korean central bank and its financial regulator will be able to investigate crypto operators and have full access to transaction data.
The FSC has been active recently with enforcement actions against crypto companies and takes the same position as the United States Securities and Exchange Commission in that it considers crypto assets securities.
South Korea’s Financial Supervisory Service, which operates under the FSC, announced an investigative body called the Digital Assets Committee in mid-2022.