Lee Eok-won’s Stance on Cryptocurrencies
Lee Eok-won, the recent candidate for the role of chairman of South Korea’s Financial Services Commission (FSC), is facing pushback from the cryptocurrency community following his critical evaluation of digital currencies. In a report published on Monday by the local news agency News1, Lee decried cryptocurrencies for their extreme fluctuations in value, lack of monetary functionality, and absence of intrinsic worth.
Concerns Over Value and Functionality
He articulated these points in written responses to lawmakers prior to his confirmation hearing, explicitly stating that virtual assets significantly diverge from conventional financial instruments like deposits and stocks because they are devoid of inherent value.
Lee’s observations suggest that the inconsistent pricing of cryptocurrencies undermines their potential to serve as reliable stores of value or mediums for transactions. This perspective has sparked backlash from stakeholders within South Korea’s burgeoning crypto sector. A representative from a South Korean crypto company expressed to News1 that deeming cryptocurrencies devoid of intrinsic value is misguided, especially considering that numerous U.S. corporations and other global entities are incorporating digital assets into their strategic reserves. They emphasized that assets such as Bitcoin possess digital utility, reinforced by the security and transferability afforded by blockchain technology.
Investment Risks and Regulatory Approach
In addition to his scorn for cryptocurrencies, Lee also took a firm position against permitting pension funds to invest in digital assets. He highlighted the high risks associated with the volatile nature of virtual currencies, cautioning against utilizing retirement savings—intended to ensure financial stability in later life—for speculative investments.
Moreover, regarding cryptocurrency exchange-traded funds (ETFs), Lee acknowledged the mix of anticipation and apprehension surrounding them. The FDA under his leadership will study global regulatory practices to determine how and when to implement suitable regulations in collaboration with lawmakers.
Innovation in Stablecoins
Nonetheless, Lee indicated that the FSC aims to foster innovation in the realm of stablecoins, while also ensuring appropriate regulatory protections are in place. This comes after reports in late June noted that several major South Korean banks are developing a won-backed stablecoin, a move that aligns with President Lee Jae-myung’s campaign promises to promote various crypto initiatives, including the issuance of stablecoins.
Support for Crypto-Related Businesses
Simultaneously, South Korea’s Ministry of SMEs and Startups has unveiled plans to remove barriers that previously restricted crypto-related businesses from being recognized as venture companies, opening new avenues for such firms that were turned away in 2018.
Growing Interest in Cryptocurrency
These developments unfold against a backdrop of rising interest in cryptocurrency among South Koreans, as data from late March reveals that users of crypto exchanges have surpassed 16 million—over 30% of the nation’s populace—following a notable uptick post-Donald Trump’s election.
However, industry observers suggest that the rush towards cryptocurrency may not solely stem from a localized belief in the promise of blockchain technology; rather, it could be rooted in financial necessity faced by younger South Koreans. Eli Ilha Yune, who leads product development at Anzaetek, a quantum machine learning firm, posited that the drive for crypto adoption among South Korea’s youth is primarily fueled by economic desperation, prompting them to pursue quick financial gains instead of a genuine faith in blockchain’s transformative potential.
