The Bank of Korea has been recently granted the authority to investigate digital asset operators, as part of its ongoing efforts to regulate the digital asset market and prevent illicit activities such as money laundering. With this new power, the bank can now gather information from digital asset operators and conduct on-site inspections.
Earlier, the bank also released its 10-year strategy called “BOK 2030” released in 2020, which included plans to expand digital innovation. In line with this strategy, the bank has been working closely with other government agencies to develop a regulatory framework for digital assets.
Bok Confident With this Decision
Granting investigative authority to the Bank of Korea was a carefully considered decision, based on the bank’s ability to demonstrate its proficiency and resources for effectively regulating the digital asset market. Despite opposition from some industry members, who expressed concerns that innovation and growth could be hindered, the Bank of Korea remains confident that the new powers will contribute to a safer and more transparent digital asset market.
The Stance of FSC
For over three years now, the FSC and the BoK have been at odds over the regulation of digital currency in South Korea. The Commission argues that giving regulatory authority over digital assets to the central bank would imply assigning monetary worth to the asset category.
As per an official from the Financial Services Commission (FSC), specifying inspection rights under the Virtual Asset Act could create confusion among the public. The official emphasized that treating virtual asset market operators in the same manner as financial institutions could be misleading.
However, the central bank defended its position and accused the FSC of trying to monopolize its regulatory powers over the digital currency industry. This viewpoint was also supported by an official from the Political Affairs Committee. A South Korean lawmaker stressed the importance of stricter regulations, citing the alarming fact that over KRW 12 trillion (US$8 billion) worth of digital assets is illegally leaving the country every year.