In the upcoming phase of crypto regulations, South Korea is set to prioritize a delicate balance between investor protection and technological innovation, according to Kim So-young, Vice Chairman of the Financial Services Commission. This shift in focus follows the collaboration between the South Korean government, central bank, and the International Monetary Fund (IMF) in developing a wholesale central bank digital currency (CBDC).
The regulatory landscape in South Korea has been evolving, with legislation enacted earlier this year to bring virtual assets under regulatory control, with a focus on investor protection. The regulatory framework is scheduled to become effective from July 2024. This move was prompted by various cryptocurrency-related issues in recent years, including an alleged fraud case involving South Korean crypto entrepreneur Do Kwon, raising concerns among the public and regulators regarding the oversight of crypto markets.
Notably, South Korean financial regulators have clarified that non-fungible tokens (NFTs) will not be subjected to the same regulations as traditional crypto assets. This distinction reflects an evolving approach to different forms of digital assets within the country, following the establishment of separate regulations for central bank digital currencies.
During the conference in Seoul, Kristalina Georgieva, Managing Director of the IMF, emphasized the need for explicit guidelines and robust global infrastructure for cryptocurrencies. Georgieva warned that without clear regulations and a strong foundation, cryptocurrencies could pose a threat to macro-financial stability in the long run.
