The Central Bank of South Korea will increase its control over the activities of virtual asset service providers (VASPs) and cryptocurrency issuers by requesting transaction data from cryptocurrency exchanges.
The Political Affairs Committee of the National Assembly of South Korea allowed the Bank of Korea to request data on trade transactions from all digital currency operators. The move is linked to discussions on virtual asset legislation and regulation of the industry to protect investors. The decision of the Central Bank to strengthen control over issuers of cryptocurrencies was made because of the possible risks associated with stablecoins. Last year, local investors suffered heavy losses due to the collapse of the Terra ecosystem.
The final word on the regulation of the digital asset industry will be with the South Korean Financial Services Commission (FSC). According to Democratic Party MP Kim Han-gyu, the FSC recognizes that the Bank of Korea should have the right to request such data, but it may not include such a provision in the legislation.
The fact is that the FSC and the Bank of Korea compete for crypto oversight powers, with the FSC often accused by the community of over-regulating crypto assets. The agency is taking action against crypto-currency companies by treating digital assets as securities, similar to how the US Securities and Exchange Commission (SEC) does. Therefore, the outcome of the debate between the Bank of South Korea and FSC will be decisive for the future regulation of the industry in the country.
Last year, the FSC announced that it would monitor investors’ crypto transactions worth more than 100 million won ($70,000). In the fall, the department, together with the National Assembly, began working on a bill that would punish crypto exchanges for hiding information and manipulating prices.