South Korea to Cooperate with China, Japan and Others on Regulating Cryptocurrency Trading
South Korean financial regulators are seeking cooperation with allied countries from Beijing and Tokyo to address cryptocurrency speculation on the market. Six commercial banks have been targeted by Seoul authorities investigating their connection to crypto trading.
The Financial Services Commission of South Korea will deepen its relationship with agencies from China and Japan to curb speculative transactions. Deputy finance ministers from the Asian countries have already met last month with each other, FSC’s chairman Choi Jong-ku revealed during a press conference.
Seoul aims to “set up a detailed system of cooperation” with Beijing and Tokyo, Choi said, Yonhap News Agency reported.
The nation’s top financial regulator spoke briefly to the media about its ongoing bank inspection that will run through Thursday with the participation of the Korean Financial Intelligence Unit. He warned against what he called an “irrational trend” of investing in cryptocurrencies, noting the “ongoing fever of speculative investment”.
In Choi’s words, cryptocurrencies are unable to play a role as a payment method. “A virtual currency only triggers side effects”, the regulator educated reporters. Fraud, illegal fundraising, hacking, speculation and manipulation of market prices were mentioned in a long list. The government official left the door open to shutting down all cryptocurrency-linked businesses to minimize the aforementioned effects, according to the Korean Herald. Choi Jong-ku said the world was facing a “policy challenge pandemic” and added that Korea’s “trial-and-error” experience can help shape the trilateral efforts of the three countries to implement regulations.
South Korea’s financial regulator is currently conducting inspections in six commercial banks, including Woori, Kookmin and Shinhan. Accounts of cryptocurrency traders were targeted last month when authorities ordered banks to stop issuing the “virtual accounts” used by cryptocurrency exchanges to manage their clients’ money.
The same day after announcing Seoul would cooperate with its Asian neighbors on curbing trading, the country issued a call for financial regulators and central bankers of 23 other countries as well as 12 organizations, including the International Monetary Fund and the European Union to cooperate on cryptocurrency regulations to stamp out speculative trading, News Bitcoin reported.
On Monday, Kim Yong-bum South Korean vice chairman of its Financial Supervisory Commission (FSC), represented his country at a meeting of the Financial Stability Board (FSB) Steering Committee in Basel, Switzerland.
The FSB is an international body consisting of financial regulators and central bankers from 24 countries, including South Korea, as well as 12 international organizations the group makes recommendations about the global financial system.
At the meeting, discussions were held “on the evaluation of regulatory reforms including virtual currency, mitigation measures against cybercrime, and cybersecurity,” Aju News reported. Speaking of cross-border digital transactions being used for illegal acts and money laundering, Kim called for the “international coordination to curb virtual currency trading,” the publication detailed. Citing that it is time to start a full-scale international debate, Kim expressed:
“As the international financial risks related to virtual currency increase, the financial authorities need to pay close attention to this…In particular, virtual currency, which is outside the traditional regulatory domain of financial authorities, is affecting consumers,” Kim said.
After explaining how the South Korean government has taken steps to “stop providing new virtual account services for virtual currency exchanges and strengthen measures to verify account holders real names,” Kim told other financial regulators:
“Virtual currency is too risky to ignore…We will improve transparency, prevent the spread of speculative transactions, and prevent money laundering,” Kim said.
Kim then urged the FSB to take action, stating that “It is necessary [for the FSB] to speedily study the potential risks of virtual currency in financial stability,” the news outlet quoted him saying. Specifically, he suggested, “we must support virtual currency countermeasures by integrating and sharing relevant information such as the contents and effects of the virtual currency regulation of each country.”
The inspections of the six commercial banks and the coming regulations is what seems to be caused the market panic yesterday since South Korea holds a significant trade volume of Bitcoin.
Bitcoin (BTC) is currently trading at [FIAT: $14,890.40] according to Coin Market Cap at the time of this report.