Korean Central Bank to Gain Right to Probe Virtual Asset Entities After Financial Regulator Drops Opposition – According to local reports, the Bank of Korea (BOK) is likely to get its wish to investigate virtual assets as the Financial Services Commission of the country has reportedly withdrawn its opposition to the central bank’s desire to obtain the “right to request data submission.” The FSC’s decision was made a few weeks after a subcommittee of the Korean Parliament’s Political Affairs Committee accused the regulator of attempting to become the exclusive regulator of virtual assets.
As per the report, the FSC decided to withdraw its demand as there were allegations that the Korean National Assembly was going ahead with its plans to incorporate the BOK’s authority to request data into the Virtual Assets Act. The FSC had several conflicts with the BOK regarding the supervision of payments and settlements before finally agreeing to the central bank’s request. The central bank has been pushing for the authority to investigate digital assets because it believes that risks arising from virtual asset markets could pose a threat to financial stability.
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According to the report on April 20, the FSC’s insistence on becoming the exclusive authority on virtual assets and its disregard for the opinions of both ruling and opposition parties may have led the regulator to back down and grant the BOK’s request. These accusations were previously raised by Korean lawmaker Kim Han-gyu on March 28, who questioned the FSC’s intention to monopolize regulation of virtual assets.
The FSC’s decision to drop its opposition to the BOK’s request suggests that there is growing recognition of the importance of regulating virtual assets to ensure financial stability. However, there is also concern about the concentration of regulatory power in a single institution. The controversy highlights the need for clear guidelines and coordination between different regulatory bodies to prevent regulatory capture and ensure effective oversight of the rapidly evolving digital asset markets.
“The Financial Services Commission acknowledges that it is necessary for the Bank of Korea to have the right to request data, but refuses to include it in the bill,” Kim said at the time. The report indicated that even though the FSC appeared to have given up on its prolonged dispute with the central bank, it is expected to obtain permission to conduct inquiries into virtual assets. Numerous bills that have been suggested to regulate virtual assets aim to empower the FSC to investigate any instances of “unjust dealings.”
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