South Korea’s crypto industry is bracing for another round of potentially restrictive regulations – with a financial regulator chief hinting that after subjecting crypto exchanges to some of the world’s most restrictive regulations, the decentralized finance (DeFi) and non-fungible token (NFT) sectors are next in line.
In an interview with Maeil Kyungjae, Financial Intelligence Unit (FIU) head Kim Jeong-gak said South Korea was keeping an eye on the Financial Action Task Force’s (FATF) upcoming recommendations on NFTs and DeFi and would seek “international consistency.”
But he also added:
“We will consider with the relevant ministries how to regulate [the two sectors] and reflect those [decisions] in an [amended] financial law.”
Kim also issued a warning of sorts to the crypto exchange sector, which has already been hit by a crackdown that has left only four trading platforms trading coins against fiat KRW. Kim stated that the FIU intends to “manage and supervise virtual currency exchanges according to the same strict standards as banks.”
He claimed that money laundering is more likely in the cryptocurrency market than in highly regulated financial institutions like banks.
He said regulators need to focus more on crypto operators and will “closely monitor” the firms in the future.
So far, only two exchanges – the country’s first trading platform, Korbit, and market leader Upbit – have received full operating licenses from the FIU, while applications from rivals Bithumb and Coinone are still under review. The rest of the country’s once-thriving exchange industry has either had to shut down or offers only crypto trading.
Critics say the government and regulators allowed a “monopoly” or “oligopoly” of four companies to emerge, wiping out promising, innovative firms along the way.
Kim, however, shrugged off this criticism, stating,
“Concern about monopolies is a phenomenon that occurs naturally when a new system is introduced.”