What are the FSC nominee’s real thoughts on cryptocurrency?
Justice minister nominee Cho Kuk may have stolen the headlines, but Eun Sung-soo, President Moon Jae-in’s nominee to head the Financial Services Commission, is the talk of the town in the cryptocurrency industry. This is because barely any discussions on cryptocurrency were had while Choi Jong-ku was head of the regulator. That’s already changing — a written answer to a hearing question on Eun’s views on cryptocurrency was submitted to the National Assembly on Monday. Reports in regard to what Eun wrote vary. While some media outlets reported that Eun suggested the legalization of cryptocurrency, others argue that Eun expressed concern about the side effects of systemizing cryptocurrency. JoinD takes a look at the original text of Eun’s answer. The first page of an 851 page-length answer The Financial Services Commission is an affiliated organization of the National Policy Committee. A total of 12 lawmakers demanded material from the confirmation hearing. Among them, only Rep. Kim Seon-dong of the main opposition Liberty Korea Party demanded materials relating to cryptocurrency. Kim in November proposed a bill on digital asset transactions. Digital assets broadly includes a range of things from bitcoin to mileage and vouchers managed via computer system. Kim demanded materials related to the circulation and approval of the use of cryptocurrency. The need for “legalization at an early stage” and “legal grounds” are mentioned on the first page of Eun’s answer. Below is the original text. Currently, virtual currency operators freely establish and operate [the business] in the market. But, there is a global move to strengthen regulations like adopting a report system to protect investors. Financial Intelligence Units in developed nations including the United States and Canada are similarly operating a registration system, which is similar to the report system based on the [relevant Korean laws]. Following in the footsteps of the international trend, an act on revising financial information that centers on intensifying laws on money laundering and adopting a reporting system is reportedly pending at the National Assembly. Four revised bills on virtual assets are pending at the National Assembly and the bill proposed by Rep. Kim Byung-wook of the ruling Democratic Party best reflects the international standard of the Financial Action Task Force on Money Laundering. Based on the reporting system, the Financial Intelligence Unit can understand the current state of cryptocurrency operators. If they are not following the basic guidance — like whether a firm representative has a criminal record or a company uses an account that verifies real names — the report can be rejected. There is a need to legalize the pending bill on specific financial transaction information. If virtual currencies are brought into the traditional finance system, it could cause side effects like the money laundering issue and speculation. So a cautious approach is necessary. Korea has seen the Kimchi premium, which refers to the gap in cryptocurrency prices in Korean exchanges compared to foreign exchanges, as high as 47 percent. Illegal withdrawals from hacking into cryptocurrency operators, which resulted in 112.1 billion won ($100.09 million) in the last three years, continuous exposure to fraud, and the basic lack of infrastructure that could deter cryptocurrency laundering [are some of the issues to be resolved]. Legal grounds should first be established based on international agreements to protect users. Rani’s note Eun’s answers are strictly based on the basic principle of “you should eat if you’re hungry, you will be full if you eat.” Although the industry will be waiting, systems related to cryptocurrency are not likely to be established within this year. Excluding Upbit, Bithumb, Coinone and Korbit, which have been issued real name account from banks, cryptocurrency exchanges will likely have to continuously use corporate account.