After three years of fighting for jurisdiction, South Korea's central bank has received a green light to investigate crypto-related firms.
In recent developments, the Bank of Korea (BoK) has been granted the authority to intensify its scrutiny of cryptocurrency operators and issuers.
According to The Korean Herald news report, the decision comes amidst the ongoing debate over virtual asset legislation in South Korea.
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The BoK and the Financial Services Commission (FSC), South Korea's financial regulator, have been competing for control over crypto jurisdiction for several years. Despite the BoK's newfound investigative rights, the FSC will still have the final word on regulating the digital asset sector.
Stablecoins have prompted concerns from the Bank of Korea about financial stability risks, and with this new power, the central bank can now request transaction data from crypto exchanges.
An official from the National Assembly's Political Affairs Committee confirmed this right last week, with the FSC set to announce its official stance at a subcommittee meeting on April 25th. The meeting is expected to speed up the implementation of South Korea's virtual asset laws.
Democratic Party lawmaker Kim Han-gyu, who proposed the country's Crypto Assets Act, expressed disappointment in the FSC, stating:
The Financial Services Commission admits that it is necessary for the Bank of Korea to have the right to request data, but it is refusing to include it in the bill.
The South Korean government's efforts to advance crypto legislation have been hindered by disagreements between the BoK and the FSC over jurisdiction. At that time, FSC warned that granting the central bank control over crypto could imply that digital assets have the same standing as traditional finance – a view the FSC chair has openly disagreed with.
The two institutions have been competing for the past three years over who should regulate the crypto sector. The FSC has faced accusations from the Political Affairs Committee, a division of the country's State Affairs Commission, of attempting to monopolize its position as the crypto regulator.
With the latest development, both the Bank of Korea and the Financial Services Commission will have the power to investigate crypto operators and access transaction data – a significant step towards better oversight of the digital asset landscape in South Korea.
In other South Korea-related news, the country's authorities continue to untangle Terraform Labs' mess, with the Seoul Southern District Prosecutor's Office seizing around $160 million in assets.
