Lee Eok-won, the individual nominated to lead South Korea’s Financial Services Commission (FSC), has voiced strong skepticism regarding cryptocurrencies.
According to a report published on Monday by News1, a local media source, Lee expressed his opinion that cryptocurrencies exhibit “extreme price swings, lack the characteristics of money,” and possess “no inherent worth.” In responses to inquiries submitted by legislators ahead of his confirmation hearing, he also stated that “digital assets are different from conventional financial instruments like deposits and bonds because they lack intrinsic value.”
Lee elaborated that the volatile nature of cryptocurrencies makes it challenging to envision them functioning as a reliable store of value or a practical medium of exchange. The news report also noted that these comments have sparked criticism from within South Korea’s cryptocurrency sector.
An unnamed executive from a South Korean crypto firm, cited by News1, argued that the assertion that crypto lacks intrinsic value is inaccurate, “considering that corporations in the US and worldwide are holding it as a strategic asset.” This official contended that “assets like Bitcoin possess digital usefulness underpinned by blockchain’s secure and transparent infrastructure.”
South Korean Youth Embraces Crypto
These comments follow recently released figures from late March, indicating that the number of crypto exchange users in South Korea has exceeded 16 million, a rise that was fueled after the election of US President Donald Trump. This figure accounts for over 30% of the entire population of South Korea.
However, some observers suggest that this surge isn’t solely driven by a widespread belief in the transformative potential of blockchain technology. During a crypto-related event in late June, Eli Ilha Yune, the chief product officer at Anzaetek, a quantum machine learning startup, proposed that the “motivation stems not primarily from…a strong faith in Web3…as seen in the West.”
Yune posited that South Korean crypto adoption is rather a result of the financial hardship faced by the younger generation. He indicated that this circumstance compels them to seek “rapid financial gains.”
Related: Binance and Tether are watching Korea closely: Here’s why
Future FSC’s Chief Crypto Regulatory Outlook
Lee also adopted a position against allowing pension funds to invest in cryptocurrencies. He clarified that “given the significant volatility and speculative nature inherent in virtual assets, widespread apprehension exists regarding the utilization of retirement savings or individual pension plans, designed to secure a consistent income during retirement years, for investment in such assets.”
The FSC chief nominee additionally commented that in regards to cryptocurrency exchange-traded funds (ETFs), “there are both hopeful expectations and concerns.” He stated that the regulatory body he will be leading will “analyze global regulatory trends” and ascertain the implementation strategy and timeline in consultation with lawmakers.
However, regarding stablecoins, Lee indicated that the FSC will endeavor to foster opportunities for innovation while simultaneously guaranteeing the existence of adequate safeguards. This follows reports from late June that eight leading banks in South Korea are engaged in developing a stablecoin pegged to the Korean Won, a move prompted after newly elected President Lee Jae-myung championed a series of crypto-related pledges during his campaign, including the approval of stablecoin issuance.
South Korea’s Ministry of SMEs and Startups has also revealed intentions to remove restrictions that have prevented crypto-related businesses from being categorized as venture companies, in early July. This change would allow crypto companies to be designated as venture businesses for the first time since their exclusion in 2018.
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