Presidential Office Orders Inquiry into Busan’s Digital Exchange Event (Updated November 2022)

[Executive Summary]

• The Office of the President ordered an inquiry into the FSC vice chairman’s presence at the Busan Blockchain Week 2022 event, asking the organizations to clarify their position on the establishment of a digital asset exchange in Busan. The FSC and FIU both responded that their position on the regulatory sandbox to facilitate a digital asset exchange in Busan remains unchanged, as they continue to oppose the proposal on grounds of concerns over legal risks, investor disputes, and the possibility of money laundering operations

The vice chairman of the Financial Services Commission attended the Blockchain Week in Busan (BWB2022) event last month and delivered opening remarks. The blockchain industry interpreted his presence at the event as a positive signal that the FSC was in favor of establishing a digital asset exchange in Busan. This could be considered as a reversal in the FSC’s position, which had previously submitted a report opposing regulatory sandbox measures for a digital asset exchange in Busan.

The Office of the President ordered the FSC and FIU to report on the circumstances of the vice chairman attending the event because it could have underlying significance regarding the direction of government policy. Following such inquiries, FSC and FIU officials have confirmed their stances on the regulatory sandbox, reaffirming their opposition to such a proposal.

In their report on the regulatory sandbox measure, the FSC and FIU cited legal risk, possibility of investor conflict, danger of money laundering, and dissonance with the administration’s economic policy agenda as their reasons for opposing the proposal.

Although each branch of the government takes a different position and perspective on the blockchain industry, it seems inevitable that the industry itself is merging into the mainstream financial industry. It is important to keep an eye on subtle changes in the positions of the FIU and the FSC, as they determine how the industry is regulated in Korea.

The integration of the blockchain industry with the traditional financial industry appears inevitable in spite of each branch of government having different stances and viewpoints on the relatively new industry. As the FSC and the FIU are in charge of deciding how the industry will be regulated in Korea, it is crucial to keep an eye on any subtle changes in their positions.

Read More: Regulatory Body Holds Off Its Actions Against Overseas Exchanges (Updated November 2022)