The South Korean government wants to regulate digital assets. Among the measures is the possibility for South Korean financial institutions to offer products such as crypto derivatives – options for buying and selling digital assets, for example.
The proposal was announced in a new report by the Presidential Committee of the Fourth Industrial Revolution (PCFIR). The measures can bring institutional investors closer – pension funds, family offices, fund managers – to digital assets.
In the statement, the agency states that it is no longer possible to stop the trading with digital assets, given the great growth of this market worldwide. The committee also said the government can follow the United States regulatory standard and sanction products such as bitcoin-linked futures contracts.
In this way, South Korean institutions will also be able to offer other services such as cryptoassets trading. “The Korean government should gradually allow institutional investors to trade encrypted digital assets and promote counter-desks (OTC) dedicated to the trading of institutional investors”, the committee stated in the report.
Digital assets expected to gain momentum in South Korea
In this draft regulation, fintechs should be responsible for developing custody solutions. The goal, therefore, is to avoid dependence on foreign custodians. In addition, exchanges must operate under some kind of license or guidance.
Currently, the sector is controlled more lightly through the guidance given to banks. A South Korean financial surveillance body under the Financial Services Commission will also directly oversee exchanges.
There are still other suggestions from the PCFIR. One of them indicates that bitcoin can be listed directly on the Korea Exchange, the country’s stock exchange, and that the terms “cryptocurrency” and “virtual currency” can be gathered under the comprehensive cryptoassets term. The PCFIR was created in 2017 to advise on policies related to new technologies and help lay the groundwork for new related sectors and services.