The Chairman of the Financial Supervisory Service (FSS) of South Korea, Lee Bok-hyun, plans to meet with Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC), in January next year to discuss issues such as cryptocurrency regulation and the extradition of Do Kwon.
According to a report by Chosunbiz, a South Korean news media, on December 18th, Lee Bok-hyun, the Chairman of the FSS, will visit the SEC in January next year and plans to meet with Chairman Gary Gensler. The main topics of this meeting will include the current state of the cryptocurrency market, regulatory policies, and perhaps the extradition issue of Do Kwon, the founder of Terra.
How will the meeting with the SEC affect South Korean regulation?
South Korean officials stated that this meeting provides a valuable opportunity for the local financial regulatory institution. Chairman Lee hopes to lead the global virtual asset market regulatory system by visiting the SEC, understand the management and regulatory methods of the virtual asset market, and establish the regulatory role of the country in virtual assets. It may also discuss the framework for cross-border regulation.
In July of this year, the South Korean National Assembly passed the “Virtual Asset User Protection Act” to strengthen investor protection. The law integrates 19 related cryptocurrency-related bills, defines digital assets, and establishes penalties for illegal activities such as insider trading, market manipulation, and unfair trading.
The law is expected to take effect in July 2024, but currently, the law only applies to non-securities virtual assets. The specific plans for whether virtual assets are considered securities, and how to manage and regulate them, are still insufficient.
Then, at the end of November, the South Korean Financial Supervisory Bureau announced the establishment of the “Virtual Asset Supervision Bureau” and the “Virtual Asset Investigation Bureau”.
According to South Korean media reports, the Virtual Asset Supervision Bureau will be responsible for overseeing the virtual asset field, including regulating virtual asset business operators, conducting supervision and inspections, market monitoring, and improving systems. In addition, they also plan to establish a regulatory system related to virtual assets to promote market stability.
On the other hand, the Virtual Asset Investigation Bureau will be a department specializing in investigating improper transactions and focusing on combating market disruption activities. Preventing market disorder caused by improper transactions and protecting users are its core tasks.
So far, the virtual asset market in South Korea has mainly been regulated by the Financial Intelligence Unit (FIU) under the Financial Services Commission. They are responsible for the reporting matters of virtual asset business operators. On the other hand, the Financial Supervisory Bureau only has a digital asset research team, which is mainly responsible for supporting virtual asset regulations, market research, and monitoring. With the establishment of these new departments, financial regulatory institutions plan to strengthen their role in the virtual asset market.
Possible discussion on Do Kwon’s extradition issue
In addition to regulatory issues, there are also divergent opinions between the United States and South Korea regarding the extradition issue of Do Kwon, the co-founder of Terraform Labs.
Originally, the Republic of Montenegro had approved the extradition request for Do Kwon, and the decision on whether to extradite him to the United States or South Korea would be made by the Minister of Justice. However, the court rejected the approval and announced that it would be retried, so where will Do Kwon go next? This issue may also become one of the topics of discussion during this meeting.