Author: MORBID-19

Compiled by: Tim, PANews

South Korea has welcomed its local version of Gary Gensler. The new head of the financial regulatory agency is named Lee Ik-hwan, a name that unexpectedly generates comedic effects in Korean due to its phonetic similarity to "200 million won" (approximately $140,000), which is equivalent to the down payment amount for some people's home purchases.

During his confirmation hearing for the position of chairman of the Financial Services Commission (FSC), he faced strict scrutiny for holding shares in the "one person, one chair" company Strategy, despite having criticized cryptocurrencies for lacking intrinsic value. (Note: "one person, one chair" company refers to a company founded and led by someone playing a core behind-the-scenes technical support role. Here it refers to the Strategy company led by Michael Saylor.)

In the written response submitted to the National Policy Committee of the National Assembly on the 31st of last month, Lee Ik-hwan stated, "Cryptographic assets have no intrinsic value, thus differing from traditional financial products such as deposits and securities," and "Due to high volatility, it is difficult to fulfill the basic functions of currency."

Regarding policies related to cryptographic assets, he also mentioned, "There are widespread concerns about allowing investments in cryptographic assets through retirement pensions or personal pensions aimed at ensuring stable income in old age," and "Although there is great anticipation for the launch of a spot Bitcoin ETF, there are also many concerns," showing a rather negative stance.

An industry insider commented, "It seems somewhat ironic that he claims cryptographic assets have no intrinsic value while investing in so-called 'crypto-themed stocks'," adding, "With the entry of U.S. presidential family members and the active legislative activities in Congress, a more forward-looking and constructive stance is needed." Lee Ik-hwan explained, "This investment was made to observe how the market operates."

Lee Ik-hwan inherently holds a bias against cryptocurrencies. This is fine.

However, if Lee Ik-hwan seems not to understand the intricacies of cryptocurrencies and instead formulates more superficial regulatory rules, this bias could lead to counterproductive outcomes.

Recently, he hinted at establishing a regulatory framework for the listing and delisting of cryptocurrencies.

Authorities also plan to expand public oversight to currently self-regulated cryptocurrency exchanges. Specifically, they intend to require exchanges to establish listing rules similar to those of the stock market, covering standards for listing and delisting, trading halts and resumption, as well as disclosure requirements.

Regarding disclosure, the relevant officials stated that they would refer to the stock market framework to develop measures for the issuance of digital assets, initial disclosures, and ongoing disclosures for listed assets.

Chairman of the Financial Commission Lee Ik-hwan stated, "We have entered the final stage of coordination with relevant ministries and plan to submit this proposal to the National Assembly within this year."

Why I think all of this will not work: Users can go on-chain.

If South Korean cryptocurrency exchanges cannot provide opportunities equivalent to those in the past, users will turn to other platforms. Given that on-chain applications and infrastructure have reached parity with centralized solutions, there are virtually no barriers for users with high demand. Moreover, as crypto-native applications can offer more opportunities in terms of yields and airdrops, it is almost illogical to keep assets on exchanges today.

In the long run, most applications and users will inevitably shift to on-chain, as jurisdictions struggle to keep pace with innovation and cannot create equivalent value enhancements in a neutral environment lacking legal constraints.

Can Upbit or Bithumb offer users a 10% return on deposits? No. Unless they ignore all the laws that bind them.

Reading Lee Ik-hwan's comments on cryptocurrencies, especially when he mentions that "cryptocurrencies struggle to fulfill the basic functions of currency," I can't help but question his policy philosophy.

No one views cryptocurrencies as "currency" anymore. We are at a stage where we discuss internet capital markets, speculation as a service, and the super-financialization before the impending collapse of late capitalist society, exacerbated by the rapid development of artificial intelligence widening the wealth gap, which will ultimately lead to societal collapse.

Lee Ik-hwan's attitude towards cryptocurrencies is akin to a revisionist interpretation of World War II history. He attempts to redefine the essence and operation of cryptocurrencies based on his unfounded assumptions, which is why he proposes ideas like "establishing listing rules similar to those of the stock market."

If the regulatory provisions he proposes are actually implemented, the South Korean market will effectively lose its appeal. The reason project teams are willing to hire locals and invest in South Korea is precisely because they understand the value of being listed on South Korean exchanges.

When we begin to implement regulations based on outdated concepts, we will ultimately achieve nothing.

I believe Lee Ik-hwan's worldview is rooted in a protectionist ideology that stems from the economic turmoil of the late 1990s. He was in his 30s during the 1997 Asian financial crisis.

But everything is changing. South Korea has changed, and we need to adapt to these changes at a faster pace. South Korea is no longer an emerging country striving to catch up; we are now an economic powerhouse with a solid consumer base and high per capita GDP, no longer relying on producing toasters and wig products to make our mark.

As the population ages, we are gradually losing our advantages in manufacturing. We must transform the country's business model upstream in the value chain, and this is our excellent opportunity.

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