The nominee for the chairman of the South Korean Financial Services Commission (FSC), Lee Byung-won, has made harsh criticisms of cryptocurrencies.
According to local news media News1 on Monday, Lee Byung-won stated that "cryptocurrencies have extreme price volatility, lack monetary function," and "have no intrinsic value." He also wrote in the confirmation hearing questionnaire submitted to lawmakers that "virtual assets are different from traditional financial products like deposits and securities; they have no intrinsic value."
Lee Byung-won explained that the volatility of cryptocurrencies makes it difficult for them to serve as a store of value or medium of exchange. The report noted that these comments have drawn criticism from the South Korean cryptocurrency industry.
An anonymous official from a South Korean cryptocurrency company told News1 that it is incorrect to say that cryptocurrencies lack intrinsic value when "American and global companies hold them as strategic reserves." The official claimed that "assets like Bitcoin have digital utility supported by the security and transferability of blockchain."
These remarks were made after data at the end of March showed that the number of users on South Korean cryptocurrency exchanges had exceeded 16 million, a figure that surged after the election of U.S. President Donald Trump. This accounts for more than 30% of South Korea's total population.
However, some believe this is not merely a result of the local population's strong belief in the potential of blockchain technology. At a cryptocurrency event in late June, Eli Ilha Yune, Chief Product Officer of quantum machine learning startup Anzaetek, stated that "the motivation does not come from… a belief in Web3… like in the West."
Yune believes that the adoption of cryptocurrency in South Korea is a result of the younger generation facing financial despair. According to him, this situation drives them to seek "quick money."
Lee Byung-won also opposed allowing pension funds to invest in cryptocurrencies. He explained that "given the high volatility and speculative nature of virtual assets, there are widespread concerns about using retirement or personal pension funds, which are intended to ensure stable income in old age, to invest in these assets."
The FSC chairman nominee also pointed out that there are "both expectations and concerns" regarding cryptocurrency exchange-traded funds (ETFs). He stated that the regulatory agency he will lead will "review global regulatory trends" and consult with lawmakers to determine implementation methods and timelines.
However, regarding stablecoins, Lee Byung-won stated that the FSC will seek to create opportunities for innovation while ensuring adequate safeguards. Earlier in late June, reports indicated that eight major banks in South Korea are developing a stablecoin backed by the Korean won, following newly elected President Lee Jae-myung's campaign promises related to cryptocurrencies, including allowing the issuance of stablecoins.
The South Korean Ministry of SMEs and Startups also announced plans in early July to lift restrictions that prevent cryptocurrency-related companies from qualifying as venture enterprises. This will allow cryptocurrency companies to be classified as venture enterprises for the first time since being excluded in 2018.
Related: Governance tokens or political chips? WLFI launched on Monday, igniting market attention.
Original: “South Korea FSC Nominee Criticizes Cryptocurrency Despite Growing Demand from Youth”
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