Lee Eok-won Critiques Cryptocurrency
Lee Eok-won, appointed as the nominee for chairman of South Korea’s Financial Services Commission (FSC), has voiced strong criticisms regarding cryptocurrency.
As reported by the local news outlet News1 on Monday, Lee stated that “crypto has extreme price volatility, lacks monetary function” and has “no intrinsic value.” He also provided written responses to questions from lawmakers prior to his confirmation hearing, asserting that “virtual assets differ from traditional financial products like deposits and securities in that they have no intrinsic value.”
He elaborated that the volatility of cryptocurrencies makes it difficult to envision them functioning as a store of value or medium of exchange. The report highlights that his comments have drawn backlash from South Korea’s crypto industry.
In a statement to News1, an anonymous official from a South Korean crypto company remarked that asserting crypto lacks intrinsic value is misguided “when the US and global corporations are holding it as a strategic reserve.” The official contended that “assets like Bitcoin have digital utility backed by blockchain security and transferability.”
Position on Pension Fund Investments
Lee also expressed opposition to permitting pension funds to invest in cryptocurrencies. He pointed out 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.”
Views on Cryptocurrency ETFs and Stablecoins
Regarding cryptocurrency exchange-traded funds (ETFs), Lee acknowledged that there are “both expectations and concerns.” He mentioned that the regulatory body he will oversee will “review global regulatory trends” and establish the approach and timeline for implementation in collaboration with lawmakers.
In regards to stablecoins, Lee stated that the FSC aims to foster opportunities for innovation while maintaining adequate safeguards. This follows reports from late June that eight prominent banks in South Korea are developing a stablecoin backed by the won after newly elected President Lee Jae-myung campaigned on a series of crypto promises, including allowing the issuance of stablecoins.
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Support for Crypto-Related Business
Additionally, South Korea’s Ministry of SMEs and Startups declared intentions to remove restrictions that have previously barred crypto-related businesses from qualifying as venture companies as of early July. This shift would permit crypto companies to be recognized as venture entities for the first time since their exclusion in 2018.
Rising Cryptocurrency User Numbers
These statements emerge after data from the end of March revealed that the number of crypto exchange users in South Korea has exceeded 16 million, a rise that followed the increase in users after US President Donald Trump’s election. This figure represents over 30% of the total population of South Korea.
However, some argue that this increase does not solely stem from a strong local belief in the potential of blockchain technology. During a crypto event in late June, Eli Ilha Yune, the chief product officer at quantum machine learning startup Anzaetek, indicated that the “motive comes not from […] a belief in Web3 […] like in the West.”
Yune suggested that, rather, South Korean crypto adoption is driven by the financial hardships faced by the younger generation, which prompts them to pursue “quick money.”
