Lee Bok-hyun, Financial Supervisory Service Chief: "Establish Virtual Asset Regulations... Mandatory Disclosure of Issuance and Holding Notes"

Holding a Discussion Forum on Financial Risk Assessment Related to Virtual Assets

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), announced that he will focus on establishing a regulatory framework related to virtual assets. This is to foster a sound market and protect investors following a series of incidents in the virtual asset market last year. He plans to introduce a new obligation for footnote disclosures and establish accounting standards. A monitoring system capable of measuring potential market risks will also be built.

On the 16th, at the 'Virtual Asset Financial Risk Review Forum' held at Front1 in Mapo, Seoul, Governor Lee stated, "The FSS plans various tasks this year to manage risks in the virtual asset market." He added, "We aim to induce faithful accounting information disclosure by establishing accounting standards related to virtual assets," and said, "We will introduce a new footnote disclosure obligation related to the issuance and holding of virtual assets and distribute best practice guidelines."

He also pointed out that although the interconnection between the virtual asset market and traditional financial markets is expected to increase, supervisory authorities currently lack data to identify potential risks, and thus announced the development of a virtual asset-related monitoring tool. Governor Lee emphasized, "Securing data is paramount to proactively respond to risks in the virtual asset market," and added, "We will enhance our capabilities to secure relevant data and measure potential risks through the development of a virtual asset monitoring tool." He further mentioned, "We also plan to conduct surveys to gather diverse opinions from financial companies and the virtual asset industry regarding virtual assets."

Lee Dae-gi, Senior Research Fellow at the Korea Institute of Finance, stressed, "If stablecoins or CBDCs replace bank deposits, there is a possibility of expanding financial system risks due to increased bank funding costs," and added, "Institutional measures must be established to minimize the risk transmission to traditional financial markets."

Kim Bu-gon, Director of the Digital Financial Innovation Bureau at the FSS, analyzed, "Currently, the direct impact of the virtual asset market on financial system stability is low," but noted, "Since cases of direct and indirect links between the two markets have recently been continuously revealed, further research and review by supervisory authorities and academia are necessary."

Kim Jun-woo, CEO of the virtual asset data platform company Jaengle, stated, "Although virtual asset data can be extracted, refined, and verified on the blockchain, the absence of monitoring tools has caused serious information asymmetry," and added, "The development of monitoring tools that can utilize regulations and on-chain information will become increasingly important."

Meanwhile, the forum was attended by a total of 12 external experts, including four academics: Professor Cheon Chang-min of Seoul National University of Science and Technology, Professor Min Se-jin of Dongguk University, Professor Park Sun-young of Dongguk University, and Professor Hong Ki-hoon of Hongik University; four researchers: Senior Research Fellows Lee Dae-gi and Lee Yoon-seok of the Korea Institute of Finance, Senior Research Fellow Lee Hyo-seop of the Capital Market Research Institute, and Senior Research Fellow Son Jun-beom of Woori Financial Management Research Institute; and four industry representatives: Kim Jun-woo, CEO of Jaengle, Cho Jin-seok, COO of Korea Digital Asset, Kim Yeol-mae, researcher at NH Investment & Securities, and Byun Young-han, Chairman of the Fintech Support Center.