South Korea’s crypto industry is braced for another round of potentially restrictive regulations – with a financial regulatory chief hinting that, fresh from subjecting crypto exchanges to some of the most restrictive regulations in the world, the decentralized finance (DeFi) and non-fungible token (NFT) sectors were next in line.
In an interview with Maeil Kyungjae, the head of the Financial Intelligence Unit (FIU) Kim Jeong-gak said that South Korea was keeping an eye on forthcoming future recommendations about NFTs and DeFi from the Financial Action Task Force (FATF), adding that the nation would strive for “international consistency.”
But he also added:
“We will consider how to [regulate the two sectors] with related ministries and reflect these [decisions] with [amended] financial law.”
Kim also fired out something of a warning to the crypto exchange sector, already reeling from a crackdown that has left only four trading platforms trading coins for fiat KRW. Kim stated that the FIU intended to “manage and supervise virtual currency exchanges under the same strict standards as banks.”
He claimed that money laundering in the cryptoasset market was more likely to occur than in highly regulated financial institutions such as banks.
He said that regulators “need to focus more on” cryptoasset business operators and would “closely monitor” firms going forward.
So far, just two exchanges – the nation’s first trading platform Korbit and the market leader Upbit, have received full operating permits from the FIU, with applications from rivals Bithumb and Coinone still under review. The remainder of the nation’s once-burgeoning exchanges industry has been either forced to close or offer crypto-only trading.
Critics say the government and regulators have allowed a four-company “monopoly” or “oligopoly” to emerge, killing off promising, innovative firms along the way.
But Kim shrugged off such criticism, reportedly stating:
“Concern about monopolies is a phenomenon that arises naturally during the process of implementing a new system.”