South Korea FSC chair advises caution on corporate crypto transactions

South Korea’s FSC chairman-designate Kim Byoung-hwan has been cautious about institutional cryptocurrency transactions, signaling opposition to Bitcoin ETFs.

South Korea’s Financial Services Commission (FSC) nominee Kim Byoung-hwan on Monday voiced caution over allowing bank accounts for institutional cryptocurrency transactions, stressing the need to prioritize investor protection.

Kim, a former vice finance minister who was appointed as FSC chairman in early July, made the comments in response to a lawmaker’s question at a parliamentary session about the need for South Korea to allow crypto accounts for companies.

“Considering the chaos we have experienced in the virtual asset market in the past, the current policy needs to prioritize investor protection,” Kim said, highlighting the potential risks such a move would bring.

When asked about the possibility of greenlighting the establishment of Bitcoin exchange-traded funds (ETFs) in South Korea, Kim took a similarly cautious stance, stating that financial authorities should assess their impact on financial market stability.

South Korea’s stance on crypto

South Korea’s cryptocurrency market has come under regulatory scrutiny over the past few years, with the government implementing strict regulations to prevent money laundering and protect investors. As a result, this has forced multiple crypto exchanges, including Huobi Korea, Cashierest, and Coinbit, to shut down their services in the country.

Despite growing global interest in crypto ETFs, South Korea has yet to legalize them and there are still concerns that such a move would hurt the local economy.

Primary concerns revolve around market stability and investor protection. In late June, the Korea Institute of Finance flagged the risks posed to the country’s economy by sports Bitcoin ETFs, saying these products would require issuers to hold and actively trade virtual assets that are highly volatile compared to traditional alternatives.