FSS "Virtual assets not yet ready to be used in transactions"

At the Digital Asset Exchange Expo (Daxpo) that took place online on Sept. 8, Deputy Director of Fintech Innovation at the Financial Supervisory Service Kim Yong-tae said it is too early to use virtual assets as a means of transaction. “The distribution rate of smartphones in Korea is 97 percent. Since virtual assets circulate on mobile platforms, they are widely accessible. Koreans are particularly capable of adopting new cultural artifacts quickly. Koreans also do not have as much resistance to investing in high-risk products. It is possible that speculation on virtual assets may happen again, as it did in 2018,” Kim said in response to the question of whether virtual assets can enter the finance sector. “When you look at the bitcoin white paper, it was made to prove a concept, just like a model house. It is too early, however, to use bitcoin in transactions because it is volatile,” Kim added. The government’s principle of fostering blockchain technology while maintaining a cautious stance toward virtual asset transactions has not changed. Since Korea suffered from overheated speculation in 2018, the government policy ensures that any overheated speculation and illicit activities are strictly punished and illegal capital laundering and ICOs continue to be regulated. The regulation on technology will likely maintain its neutrality. The government has implemented a regulatory sandbox program for fostering blockchain technology. For instance, Kasa Korea is planning to release a service that uses distributed ledger technology (DLT) to digitize real estate liquidization profit stocks and issues and distributes them to retail investors. Koscom is using blockchain technology to use and manage stockholder’s lists of private, small and medium-sized businesses in a transparent manner. Iconloop is planning to provide decentralized ID (DID) services via the sandbox regulation program using blockchain technology. Kim mentioned the P2P market as an example, saying that the finance industry is an industry based on both trust and regulation. “The P2P industry was shaken due to some P2P enterprises that took out loans to repay their debts and made false announcements. The virtual asset industry can also lose trust and create victims if virtual asset businesses file for initial public offerings of dangerous coins or recommend leverage items that are volatile,” Kim said. “When the Act on Reporting and Using Specified Financial Transaction Information goes into effect next March, investor protection is possible by establishing a transparent flow of capital that goes into virtual asset investments,” Kim said as he elaborated on the purpose of the legislation and the government’s stance on virtual assets.

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