South Korea's Financial Services Commission has created a Digital Assets Committee to focus on cryptocurrency regulation.
The massive fall of USTC and LUNC from the Terra Classic blockchain ecosystem has prompted Korean regulators to create a new committee that will be tasked with formulating the necessary regulation for the cryptoasset industry.
South Korea's Financial Services Commission (FSC), the country's top financial authority, has said that The LUNC incident highlighted the urgent need to establish a new body dedicated to overseeing and regulating cryptocurrencies., due to the multi-million dollar losses caused to millions of investors by the disappearance of the Terra Classic cryptocurrency.
From this new body, which will be launched this June, Korean regulators will be able to draft and establish new policy, as well as rules and regulations that promote the supervision of crypto assets, in order to mitigate risks and ensure financial stability of investors and the country.
One of the main areas of focus of this new committee is tracking and identifying insider trading and unfair practices in cryptoasset trading.
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South Korea's Digital Assets Committee will serve as a control tower for cryptocurrencies until a precise regulatory framework for digital assets is enacted and an exclusive regulatory agency is established within the government, the Korean regulator said.
Cryptocurrency regulation in South Korea
Cryptocurrencies have become one of the fastest growing markets worldwide, which has made their regulation increasingly important and a priority for governments.
A spokesman for the current South Korean government has noted that the new regulatory policies to be created The new committee will minimize market confusion and help improve the effectiveness of current regulations.The aim of the new Digital Assets Committee is also to help the various financial-related bodies, such as the Ministry of Strategy and Finance, the Financial Services Commission, the Ministry of Science and ICT, and the Personal Information Protection Committee, to unify their systems and, at the same time, draft regulations that help protect investors in the crypto space.
The spokesperson also noted that the launch of the new Virtual Assets Committee will occur immediately after the inauguration of the new chairman of the South Korean Financial Services Commission.
Korean President Proposes Institutionalizing Cryptocurrencies in 2024
Yoon Suk-yeol, the current president of South Korea, has said that he will regulate the cryptocurrency industry in the next two years to promote its innovation in a responsible manner.
The current government is preparing a bill, called the “Basic Law on Digital Assets,” to be implemented in 2024, which proposes to institutionalize cryptocurrencies, to allow their use and adoption by government agencies, banks, financial institutions, and other entities. In addition to this, the bill will help the Korean government build a solid infrastructure to support technological development, while promoting the security and stability of the economy and investors.
In South Korea, despite the strict regulation that weighs on the cryptocurrency industry today, crypto asset trading has grown exponentially in the last year. According to the data from the macro survey Global Consumer Survey According to Statista, South Korea ranked second last year as the country with the highest cryptocurrency boom among its citizens.
However, the collapse of Terra Classic’s USTC and LUNC, which caused losses of over $40.000 billion, has once again raised alarm bells among regulators. This has led to Korean exchange platforms marking LUNC as a warning asset.
UK wants to supervise stablecoins
Meanwhile, from the United Kingdom the Treasury Department offers to expand the Bank of England's powers to integrate stablecoins under the Financial Market Infrastructure Special Management Regime (FMI SAR). This is in order to create special protections that allow for the efficient management of potential systemic failures related to cryptocurrency companies.
UK Treasury wants to prioritize stablecoin regulation in the wake of USTC collapse.
On the other hand, the government has said that, due to their potential to become a widespread means of payment, it recommends strengthening the supervision of stablecoins, in order to mitigate the existing risks for consumers of these digital assets and to guarantee financial stability and market integrity.
Continue reading: LUNA, labeled as a “warning asset” in South Korea
