Virtual Currency and OnTu Act Neglected in Electronic Financial Transactions Act... "Might Be Delayed Again This Year"

Ahead of the Presidential Election, Cryptocurrency and OnTu Act Emerge as Key Issues
Budget Review Approaches... Tight Schedule for Regular National Assembly Session

[Asia Economy Reporter Kiho Sung] There are growing views that discussions on the amendment to the Electronic Financial Transactions Act (EFTA), which caused conflicts between the Bank of Korea and the Financial Services Commission, have been sidelined again in this regular session of the National Assembly. Although the National Assembly has completed the audit of state affairs and entered the regular session schedule, no plans have been made for discussions. In particular, as cryptocurrencies and the Online Platform Fairness Act (Act on Fairness in Online Platform Intermediated Transactions) have emerged as major issues in the National Assembly, there is increasing speculation that discussions on the EFTA may be postponed until next year. Fintech companies that were planning new businesses are expressing frustration over the delayed bill processing.

According to the National Assembly on the 4th, the Political Affairs Committee has not finalized the schedule for the subcommittee to review bills related to the EFTA. A Political Affairs Committee official said, "Due to the presidential primary elections of each party, discussions to set the subcommittee schedule have not yet started," adding, "After the ruling and opposition parties finalize their presidential candidates, the party secretaries will coordinate the schedule."

The EFTA amendment bill mainly includes the introduction of comprehensive payment settlement operators and payment instruction transmission services (MyPayment), and allowing postpaid payments for simple payments. Initially, the Political Affairs Committee planned to hold a public hearing on the EFTA amendment bill in March this year and then proceed with discussions in the subcommittee. However, the 'Conflict of Interest Prevention Act' issue, which arose due to the Korea Land and Housing Corporation (LH) scandal, pushed it to a lower priority.

The financial sector conflicts that surfaced early in the EFTA amendment discussions have yet to reach a consensus. The Financial Services Commission and the Bank of Korea have not been able to narrow differences over issues such as external settlement of internal transactions and the legalization of open banking. Financial Services Commission Chairman Seung-beom Ko stated during this year's audit, "We will discuss the remaining issues and push for the amendment within this year," but no concrete results have emerged yet.

Although discussions on the EFTA continue to be delayed, there seems to be no prospect for bill review. Recently, voices within the ruling party have been rising to postpone taxation on cryptocurrencies ahead of next year's presidential election. Also, the Online Platform Fairness Act, a policy of Democratic Party candidate Lee Jae-myung, is expected to be proposed soon. The act is expected to include radical provisions allowing the division of online platform companies if their business expansion harms local small businesses. Since all these issues are highly volatile agendas ahead of next year's presidential election, there are concerns that they may overshadow all other issues.

The schedule is also tight. The National Assembly's Special Committee on Budget and Accounts decided on the 1st to start reviewing the next year's budget bill, totaling 604.4 trillion won, from this week. The legal deadline for budget approval is set for the 2nd of next month, which is also when the regular session ends.

The fintech industry, which has been waiting for the bill's passage, is expressing frustration. Especially, the anxiety among small and medium-sized fintech companies that were expecting to expand into new business areas is intensifying. A fintech industry official said, "When discussions on the EFTA started earlier this year, we did not expect such delays," adding, "Since the budget season and the presidential election season coincide, there are concerns that discussions on the EFTA amendment bill will be pushed to next year."