Regulators in South Korea are keen on reforms in the financial sector that could much likely bring about the direct involvement of banks in the country’s USD42 billion crypto industry. This is also being seen as a strategy to avert a Terra-LUNA debacle.
Kim Joo-hyun, the Korean Financial Services Commission (FSC) Chairman, said they will allow domestic financial companies to do anything that global financial companies are doing. He outlined that the goal is to prepare the ground for domestic players in the global financial market like BTS to emerge. Kim said liquidity in the financial sector, amid the soaring interest rate, should not only stick to safe assets. He believes it should be induced to flow into innovative sectors. Kim Hyoung-joong, the Korea Fintech Society (KFS) president, said the country’s digital finance needs innovation. He pointed out that reform is a good way for the administration to differentiate itself from the last.
In regards to the fall of Terra-LUNA, South Korea is fully alert to tackle Do Kwon whenever he arrives in the country. South Korea’s Ministry of Justice has also sought a travel ban on Terra co-founder Shin Hyun-seung. Kim Hyoung said Terra-LUNA will be a storm in a teacup by the time regulators loosen the regulators on crypto. Despite the downfall in the global crypto industry, South Korea believes that digital reform in the financial sector is the way to go.
The FSC is set to review restrictions on the scope of businesses and subsidiaries of financial companies like banks and securities firms. The Korea Federation of Banks wants banks to be allowed to pursue businesses in the crypto industry. Banks under the current regulations cannot acquire more than a 20% stake in a non-financial company. They are limited in directly operating or having subsidiaries in other businesses involved with the crypto industry. The banks are hopeful about FSC’s promise to accelerate the building of infrastructure for digital finance innovation. The FSC intends to establish a regulatory framework for emerging digital sectors like crypto assets and fractional investments.