South Korea’s Financial Services Commission (FSC) chief nominee Lee Eok-won is facing backlash from the cryptocurrency community after stating that cryptocurrencies are devoid of value.
In his written responses submitted before his confirmation hearing, Lee argued that cryptocurrencies do not have intrinsic value like traditional financial instruments such as deposits and equities. He highlighted the volatility of cryptocurrencies as a hindrance to their function as a store of value or medium of exchange.
Lee’s stance echoes the South Korean government’s position that virtual assets lack intrinsic value and cannot be considered as currencies or financial products. He also expressed reservations about pension and retirement funds investing in crypto assets due to concerns about market volatility and speculation.
On the topic of approving a spot Bitcoin ETF, Lee acknowledged the differing expectations and concerns surrounding its impact. He mentioned that Korean authorities will take into account global regulatory trends before deciding on implementation methods and schedules in consultation with the National Assembly. However, he expressed support for regulating stablecoins while fostering innovation.
South Korea, under President Lee Jae-myung’s leadership, is in the process of formulating regulations for stablecoins pegged to the local currency. Despite the government’s cautious approach, the cryptocurrency industry has criticized Lee’s views as outdated.
Critics have pointed out that arguments against the intrinsic value of cryptocurrencies were prevalent among traditional finance figures in the past but are now considered inappropriate given the increased adoption of digital assets. An executive at Xangle criticized Lee’s statement, calling it a product of ignorance and lack of understanding.
The executive highlighted the value creation in the crypto space, citing examples of significant token buybacks and revenue generation by blockchain projects. He emphasized that projects like Hyperliquid, Tron, Ethena, and Pump.fun have demonstrated tangible value through revenue generation.
Despite the growing interest from retail investors in South Korea, the government has taken a cautious approach to crypto adoption. Regulatory guidance issued by the Financial Supervisory Service (FSS) and the South Korean FSC has restricted exposure to crypto assets for domestic firms and exchanges.
Despite regulatory constraints, South Korean retail investors have shown a shift towards crypto investments, with significant outflows from traditional stocks like Tesla in favor of crypto proxies. The trend indicates a growing appetite for digital assets among Korean investors.
As South Korea navigates the evolving landscape of cryptocurrencies, it remains to be seen how President Lee Jae-myung’s administration will balance regulatory caution with the demands of investors seeking exposure to the digital asset sector. The crypto community continues to advocate for reforms that could facilitate South Korea’s participation in the crypto market.