FSS Governor: "Limits of virtual asset self-regulation... Supervisory framework at the level of the Capital Markets Act"

Lee Chan-jin, Governor of the Financial Supervisory Service, said on the 21st at a parliamentary audit by the National Assembly's Standing Committee on Economy and Finance that, regarding the supervisory framework for the virtual asset market, "we are keenly aware of the limits of the virtual asset self-regulatory system," and "we must enter a supervisory framework at a level comparable to the Capital Markets Act."

Lee Heon-seung, a member of the People Power Party, pointed out at the audit that "the FSS receives 7 billion won in supervisory contributions from the virtual asset industry and operates a supervisory organization of 42 people, but its record in detecting unfair trading or imposing sanctions is lacking."

He added that "the watchlist designation system does not produce a substantial warning effect, and the top 10% of investors account for 91% of total trading volume, indicating the market is excessively concentrated in some large exchanges and investors," and pointed out the need for institutional improvement, saying "trading volume is being artificially inflated by VIP rebates, specific-asset events, wash trading, etc."

In response, the Governor said, "I fully agree," and explained, "we are consulting with the Financial Services Commission under the awareness that in the second-stage legislation we need to enter a supervisory and regulatory framework comparable to the Capital Markets Act." The Governor especially expressed concern that "the monopolistic harms in the virtual asset market are appearing severely," and "if stablecoins or security tokens (STO) are institutionalized in this state, the problem could become larger."

He said, "To prevent monopolistic harms, legacy financial institutions that are already supervised within the regulated sector should participate in part of the virtual asset exchange market," and "we must enter the virtual asset era in an environment where the competitive system works properly."

He added, "The FSS will supplement the limits of self-regulation and strengthen a permanent monitoring and investigative cooperation system," and "we will thoroughly supervise so that it can be established as a transparent and responsible investment market, not a speculative market."

Reporter Park Ju-yeon grumpy_cat@hankyung.com