Crypto Journalist
Anas Hassan
Crypto Journalist
Anas Hassan
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South Korea’s Financial Services Commission (FSC) chief nominee Lee Eok-won is facing criticism from the crypto community following his assertion that cryptocurrencies are worthless.
In written responses submitted ahead of his confirmation hearing, Lee stated that cryptocurrencies lack intrinsic value, unlike traditional financial products such as deposits and equities.
Lee argued that cryptocurrency volatility prevents them from fulfilling essential functions of a currency, including serving as a store of value or a medium of exchange.
South Korea FSC Nominee Sparks Outrage With “Anti-Crypto” Stance
This position aligns with the South Korean government’s stance that virtual assets lack intrinsic value and cannot be classified as a currency or a financial product.
Lee also expressed reservations about pension and retirement funds investing in crypto assets, citing concerns about market volatility and speculation.
Regarding the approval of a spot Bitcoin ETF, Lee acknowledged the varying expectations and concerns about its impact, stating that Korean authorities will consider global regulatory trends before determining implementation methods and schedules in consultation with the National Assembly.
However, Lee indicated support for stablecoin regulation, promising “sufficient supplementary measures while creating opportunities for innovation.”
Under President Lee Jae-myung’s endorsement, South Korea is developing regulations for local-currency-pegged stablecoins.
The virtual asset industry, however, has criticized Lee’s stance as outdated.
Similar “no intrinsic value” arguments were common among figures like Bank of England Governor Andrew Bailey and JPMorgan CEO Jamie Dimon from 2017 to 2021, but are now considered inappropriate given the increased adoption of cryptocurrencies.
An executive at Xangle, a blockchain data service provider, specifically criticized Lee Eok-won’s statement as one born out of “ignorance and a lack of understanding”.
The executive noted that crypto critics often hold traditional stocks, such as Apple, while questioning the intrinsic value of crypto.
He compared the traditional payment infrastructure of PayPal to the blockchain platform Hyperliquid, pointing out that Hyperliquid conducted $1.5 billion in token buybacks this year from revenue generated, similar to stock buybacks by PayPal and Apple.
He added that in just the past month, major projects like Tron generated $430 million, Ethena $68 million, and Pump.fun $42 million, and Ethereum $15 million, which are a testament to the value they create.
South Korean Government Tightens Grip on Crypto Adoption
However, it appears that South Korea as a whole remains cautious about crypto and virtual assets.
In July, the Financial Supervisory Service (FSS) issued guidance directing domestic firms to limit their exposure to crypto stocks, including those of Coinbase and Strategy, in ETF portfolios.
The directive reinforces the South Korean 2017 administrative guidance on virtual currencies, which restricts financial institutions from holding, purchasing, or investing in virtual assets.
Similarly, in August, the South Korean FSC issued fresh administrative guidance to exchanges, instructing them to halt operations that allow users to borrow against cryptocurrencies or fiat deposits.
Despite regulatory caution, South Korean retail investors are showing growing interest in crypto.
Korean investors sold a net $657 million of Tesla stock during August, the largest outflow since early 2023, while pivoting toward crypto investments amid disillusionment with the electric vehicle maker.
According to Bloomberg, South Korean investors now favor volatile crypto proxies, such as Bitmine Immersion Technologies, which attracted $253 million in net inflows in August.
Data from the Korean Center for International Finance show that retail investors reduced their purchases of U.S. big tech companies from a monthly average of $1.68 billion (January-April) to $260 million in July.
It is still unclear whether President Lee Jae-myung’s administration will grant the wishes of those who are willing to accept the risks associated with crypto assets by opening doors through crypto reforms that could facilitate South Korea’s participation in the digital asset sector.
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