South Korea’s financial regulator is developing new tools to regularly monitor crypto risks. Regulators warn that while the impact of crypto markets on the traditional financial system is still low, the risks crypto poses to the country’s financial stability could increase sharply in the future.
South Korean regulators are developing a crypto monitoring tool
South Korea’s Financial Supervisory Service (FSS) plans to develop a crypto surveillance tool and regularly inspect risks associated with crypto assets, FSS President Lee Bok-hyun reportedly revealed Monday at a conference on the interconnection of crypto markets and traditional financial markets. He said as quoted by local media.
The Financial Supervisory Service is planning a number of initiatives this year to manage the risks of virtual asset markets.
Regarding crypto monitoring tools, Lee explained that despite the expected increase in interconnections between crypto markets and traditional financial markets, supervisors currently lack the data to identify potential risks from crypto.
“Securing data is of utmost importance in order to proactively address the risks of virtual asset markets,” the FSS chief stressed. Additionally, Lee stated that regulators plan to establish new crypto-related disclosure requirements.
The Impact of Crypto Markets on Traditional Financial Markets
The FSS governor noted that domestic financial companies do not directly offer crypto-related services, adding that.
Despite the growth of the virtual asset market, its direct impact on the stability of the financial system is still low.
However, Lee warned that if the domestic crypto market grows significantly in size, the impact on financial stability could increase dramatically.
Global regulators have warned of increasing interconnectivity between traditional financial and crypto markets, with the FSS chief noting that many countries are “introducing serious regulatory measures for stablecoins” following the collapse of the Terra-luna ecosystem.
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