First it was the United States which announced the creation of a new task force that would help regulate the digital currency market and soon, Japan followed the lead after its government signed an executive order that replaced the Inspection Bureau with a special regulatory unit tasked with combatting crypto fraud in the country. Now, South Korea is the latest country to announce a division created especially for the country’s crypto market.
A Cautious Approach
The Financial Services Commission in South Korea is planning a huge organizational change in the cryptocurrency industry by creating a new digital currency division to regulate and protect the crypto sector from online fraud. The commission says that with a growing acceptance of digital currencies in today’s world, it is important to take the necessary regulatory steps in order to protect the crypt businesses and their consumers.
Over the past, South Korean government has shown reluctance in adapting to the new financial innovations and employed a conservative approach in dealing with blockchain technologies and digital currencies. But in April, the country’s lawmakers reviewed the proposal put forth by G20, a powerful international forum, regarding the regulation of cryptocurrencies. G20 has designed a set of ‘unified regulations’ that all countries can apply to their digital currency markets. South Korean government approved the regulatory proposal in order to ensure consumer safety.
Combatting Crypto Frauds
The new regulatory move by South Korea showed the country’s growing interest in cryptocurrencies, and now the Financial Services Commission (FSC) has gone a step further by announcing during a press release that the industry is set to undergo serious changes in the future after the creation of a Financial Innovation Bureau which will help cope with new challenges and developments in the financial sector – including the growth of cryptocurrencies.
On April 24, the Japanese government also announced the creation of the country’s first ever self-regulatory division for digital currency exchange businesses called the Japanese Cryptocurrency Exchange Association (JCEA) which will oversee sixteen licensed operators for cryptocurrency exchange and trade in Japan. The move came shortly after one of the largest crypto heists which set back Coinheck by a whopping $530 million.
Division to Oversee Big Data and Fintech
The new South Korean organization will oversee several aspects of the financial industry instead of just cryptocurrency. In the press conference, FSC chairman explained that the division will create several policy initiatives for big data and FinTech in the coming months. Although the lifespan of the Financial Innovation Bureau is only two years, the government believes that the digital currency market of the country could largely benefit from it.
The move was initially met with skepticism from the crypto industry due to fears of overregulation by the government, although it quickly faded away after the lawmakers assured that the new division will work concurrently with the Financial Stability Board, which has worked in favor of cryptocurrency assets, asserting that digital currencies will not threaten the stability of current global financial systems.
A Step in the Right Direction
Despite skepticism from crypto exchange managers, the overall sentiment of the crypto community after the announcement of the division has been positive. Many are saying that South Korea is ready to embrace the changing financial innovations since its people can quickly adopt new technology and the unparalleled high-speed internet infrastructure in the country makes it a perfect incubator for testing out new virtual currencies and blockchain systems.
But now it is up to the lawmakers in South Korea to devise a regulatory system that creates a favorable environment for the growth of virtual currencies. Even before announcing the creation of Financial Innovation Bureau, South Korean had started taking a number of positive, yet cautious, steps towards making the cryptocurrency industry more secure.
Just last month the government changed the status of cryptocurrency exchanges from communication vendors to legal financial entities, and even though progress in the regulation department has been slow, the country is slowly starting to recognize the potential of the blockchain technology and various virtual currencies in the future. Now the creation of a financial innovation division has started a new chapter in the story of global financial innovation.