Lee Bok-hyun, Governor of South Korea’s Financial Supervisory Service (FSS), has suggested that the country may move towards a free market approach to cryptocurrency regulation. During a recent parliamentary audit, the governor addressed concerns about rising competition in crypto interest rates on exchanges like Bithumb. He noted that as part of the Virtual Asset User Protection Act, the regulator is creating a more flexible regulatory framework to ensure customer safety without stifling competition.
The Virtual Asset User Protection Act, which occurred on July 19, focuses on enhancing customer protection. The FSS has diligently followed through with implementing these regulations, meeting with some of the top crypto exchanges, including Upbit, Bithumb, Coinone, Korbit, and Gopax. Such discussions have included deposit usage fees and disputes over the proper fee rates.
Also Read: South Korean National Assembly Investigates AVAIL Token for Price Manipulation
Interest Rate Competition Among Crypto Exchanges
Another locus of competition has also emerged around interest rates in cryptocurrency. The interest rates were to be first declared on July 19, with Upbit declaring 1.3%, Bithumb declaring 2%, and Korbit extending its interest rate Tariff to 2.5%. This competition became even more brutal when Upbit raised its rate to 2.1%, and in response, Bithumb quickly raised theirs to 2.2%. Bithumb increased its rate to 4%, which the FSS fought and later compelled Bithumb to withdraw the raise.
Apart from controlling the interest rates, which affect the prices, the FSC Chairman Kim Byoung-hwan singled out the necessity of managing such rates. He also said that he favored optional and bilateral solutions from exchanges to restore equilibrium in the market.
South Korea’s aim of regulating the cryptocurrency business goes beyond interest rates. The government is examining suspected market manipulation, including tokens like AVAIL and NFP. Coinone, one of the impacted exchanges, has appointed law firms to investigate the NFP issue.
In conclusion, South Korea’s regulatory approach to crypto continues evolving, balancing customer protection and market competition.
Also Read: South Korea’s FSC Moves to Reform Crypto Regulations with Bitcoin ETFs and Corporate Accounts
