Kim Juhyun "Reviewing Own Legislation"... Government Proposal for 'Virtual Asset Act' to Be Released

[Asia Economy Reporter Ji Yeon-jin] On the 8th, Kim Ju-hyun, Chairman of the Financial Services Commission, said regarding the enactment of the Basic Act on Virtual Assets, "In addition to the bills pending in the National Assembly, we (the FSC) are independently reviewing legislation and will soon go through a public discussion process to gather opinions."

Chairman Kim stated this during a briefing with the FSC press corps ahead of a work report to President Yoon Seok-yeol, saying, "There are currently 13 bills related to virtual assets pending in the National Assembly, and we (the FSC) are internally considering legislation."

Following last year's surge in virtual asset investments, 13 bills, including the Basic Act on Virtual Assets aimed at fostering the virtual market and protecting investors, have been proposed by lawmakers in the National Assembly. Since financial policy typically prioritizes protecting capital market investors, if the FSC leads the legislation, it is likely to emphasize investor protection over fostering the virtual market.

In fact, during the work report, the FSC announced that even before the enactment of virtual asset laws, it plans to encourage the industry's self-regulation efforts and promote supervision and consumer protection of virtual asset operators through the Act on Reporting and Using Specified Financial Transaction Information (the Special Financial Transactions Act) and investigations by prosecutors and police.

Chairman Kim said, "On one hand, many people say regulations should be very strict, and on the other hand, there are arguments that strict regulations should not be imposed for the sake of innovation, so there will be significant controversy," adding, "The European Union (EU) has already announced the ‘MiCA’ (Markets in Crypto-Assets) regulation, and Japan also has laws. Based on these, we are supplementing and creating legislation tailored to Korea's characteristics."

The FSC also plans to strengthen market monitoring and inspections of virtual asset operators to prevent money laundering using virtual assets, and through an intergovernmental consultative body, request thorough investigations and crackdowns by the Ministry of Justice and prosecutors and police on unfair practices related to virtual assets (such as wash trading) and illegal transactions (such as fraud and illegal remittance).

Meanwhile, according to a survey conducted by the Korea Digital Asset Operators Association (KDA) in April among 722 people including academics, experts, associations, businesspeople, and investors in the virtual asset field, the Ministry of Science and ICT was identified as the optimal department for virtual asset policy by 495 respondents (68.2%), the highest number among the Financial Services Commission, the Ministry of Science and ICT, and the Ministry of Economy and Finance. The FSC received only 157 votes (21.7%). Most respondents cited the reason as "because it is the main department for blockchain, the underlying technology of digital assets."