Bank of Korea: The crypto market also needs to be regulated at the level of banking law and capital market law

05/18 05:16

According to Seoul Economic Daily, the Bank of Korea released a report titled “Assessing Defects in the Crypto Asset Market and Their Impact on Major Global Events.” The report stated that if deposits or loans in the crypto asset market are the same as the traditional financial industry and face the same risks, the crypto market should be subject to the same regulation as the existing industry. According to the specific analysis of the report, through the investigation of major events such as the Terra Luna crisis, Celsius, Three Arrows Capital, and FTX bankruptcy that occurred last year, the central bank found similarities with the loopholes that appeared in the traditional financial market in the past, such as unsustainable business structures, Liquidity risk, leverage, opaque financials, etc. Although the major events that occurred in the crypto market last year did not have an impact on the entire financial system, as the connection between crypto assets and traditional financial markets is gradually strengthened, it may pose a threat to the financial system in the future. Therefore, legislation should also be passed for crypto assets to apply the principle of "same behavior, same risk, and same supervision". The person in charge of the Bank of Korea stated that in foreign countries, crypto assets are used to deposit funds, collect interest, or operate like funds, but due to unclear definitions, there is no regulatory basis; considering the negative events that occurred last year, if the crypto asset market economic function is similar to the traditional financial industry, regulatory rules similar to the "Banking Law" or "Capital Market and Financial Investment Services Law" should be formulated.

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