Lee Eok-won, the nominee for chairman of South Korea’s Financial Services Commission (FSC), has made harshly critical remarks about cryptocurrency.
According to a Monday report by local news outlet News1, Lee said that “crypto has extreme price volatility, lacks monetary function” and has “no intrinsic value.” He also wrote in answers questions submitted by lawmakers ahead of his confirmation hearing that “virtual assets differ from traditional financial products like deposits and securities in that they have no intrinsic value.”
Lee explained that the volatility of cryptocurrencies makes it hard to imagine them acting as a store of value or medium of exchange. The report notes that the remarks attracted criticism from South Korea’s crypto industry.
An anonymous South Korean crypto company official, quoted by News1, said that crypto lacking intrinsic value is wrong “when the US and global corporations are holding it as a strategic reserve.” The official claimed that “assets like Bitcoin have digital utility backed by blockchain security and transferability.”
South Korean youth bets on crypto
These remarks come after data from the end of March showed that crypto exchange users in South Korea have surpassed 16 million, following a surge in their number after US President Donald Trump’s election. This represents over 30% of South Korea’s total population.
Still, some suggest that this is not simply a consequence of many among the local population deeply believing in the potential of blockchain technology. During a late June crypto event, Eli Ilha Yune, chief product officer at quantum machine learning startup Anzaetek, suggested that the “motive comes not from […] a belief in Web3 […] like in the West.”
Yune suggested that, instead, South Korean crypto adoption is a consequence of the financial desperation afflicting the younger generation. According to him, this situation pushes them to seek “quick money.”
Related: Binance and Tether are watching Korea closely: Here’s why
Future FSC’s chief crypto regulatory outlook
Lee also took a stance against allowing crypto investments by pension funds. He explained that “given the high volatility and speculative nature of virtual assets, there is widespread concern about using retirement or personal pension funds, which are meant to ensure a stable income in old age, to invest in them.”
The FSC chief nominee also noted that, when it comes to cryptocurrency exchange-traded funds (ETFs), “there are both expectations and concerns.” He said that the regulatory body he will head will “review global regulatory trends” and determine the implementation approach and timeline in consultation with lawmakers.
Still, when it comes to stablecoins, Lee said that the FSC would seek to create opportunities for innovation while ensuring adequate safeguards. This follows late June reports that eight major banks in South Korea are working on a stablecoin backed by the won after newly elected President Lee Jae-myung campaigned on a list of crypto promises — including allowing the issuance of stablecoins.
South Korea’s Ministry of SMEs and Startups also announced plans to lift restrictions preventing crypto-related businesses from qualifying as venture companies in early July. This would allow crypto companies to be classified as venture businesses for the first time since they were excluded in 2018.
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