Author: MORBID-19
Compiled by Tim, PANews
South Korea has a local version of Gary Gensler. The new head of its financial regulator is named Lee Euk-hwan, a name that has unexpectedly become comical in Korean, as it sounds strikingly similar to 200 million won (about $140,000), the equivalent of a down payment for some people buying a house.
During his confirmation hearing to be chairman of the Financial Services Commission (FSC), he faced scrutiny for his stake in Strategy, a "one-man, one-chair" firm, despite his previous criticism of cryptocurrencies as having no real value. (Note: A "one-man, one-chair" firm is a company founded and led by someone who plays a core behind-the-scenes technical support role. In this case, Strategy, led by Michael Saylor, is a firm.)
In a written reply submitted to the National Policy Committee of the National Assembly on the 31st of last month, Lee E-hwan stated: "Crypto assets have no intrinsic value, and therefore are different from traditional financial products such as deposits and securities." "Due to their high volatility, it is difficult for them to perform the basic functions of currency."
Regarding policies related to crypto assets, he also said: "There are widespread concerns about allowing crypto asset investment through retirement annuities or personal pensions designed to ensure stable income in old age." "Although there are great expectations for the launch of a spot Bitcoin ETF, there are also many concerns." Li Yihuan expressed a rather negative attitude.
One industry insider commented, "It seems somewhat ironic that despite claiming that crypto assets have no intrinsic value, one is investing in so-called 'crypto-themed stocks.'" "With the entry of the US President's family and active legislative activity in Congress, a more forward-looking and constructive attitude is necessary." Lee Yi-hwan explained, "I made this investment to observe how the market operates."
Li Yihuan is inherently biased against cryptocurrencies. That’s okay.
But when Li Yihuan does not seem to understand the subtleties of cryptocurrency and instead formulates more superficial regulatory rules, this bias may lead to counterproductive consequences.
Recently, he hinted at the establishment of a regulatory framework for the listing and delisting of cryptocurrencies.
Authorities also plan to expand public oversight to currently self-regulating cryptocurrency exchanges. Specifically, they intend to require exchanges to establish listing rules similar to those used by the stock market, covering listing and delisting standards, trading suspensions and resumptions, and disclosure requirements.
In terms of disclosure, relevant officials said that they will refer to the stock market framework to formulate relevant measures for digital asset issuance, initial disclosure and continuous disclosure of listed assets.
Financial Services Commission Chairman Lee Yi-yuan said: "We are in the final stage of coordination with relevant ministries and plan to submit the proposal to Congress within this year."
Why I think none of this will work: Users can go on-chain.
If South Korean cryptocurrency exchanges fail to offer the same opportunities as before, users will migrate to other platforms. Given that on-chain applications and infrastructure are now comparable to centralized solutions, there are virtually no barriers for demanding users. Furthermore, crypto-native applications offer greater opportunities for yield and airdrops, it seems illogical to keep assets on exchanges.
In the long run, most applications and users will inevitably move on-chain as jurisdictions struggle to keep up with the pace of innovation and create the same value enhancement in a neutral environment without legal constraints.
Can Upbit or Bithumb offer users a 10% return on their deposits? No. Not unless they disregard all the laws that bind them.
After reading Li Yihuan's remarks on cryptocurrencies, especially when he mentioned that "cryptocurrencies have difficulty in fulfilling the basic functions of currency", I can't help but doubt his policy philosophy.
No one thinks of cryptocurrency as “money” anymore. We’re at a point where we’re talking about internet capital markets, speculation as a service, and the hyper-financialization that precedes the apocalyptic end of late capitalist society, which will eventually collapse as the rapid development of artificial intelligence exacerbates the gap between rich and poor.
Lee Yihuan's approach to cryptocurrencies resembles a revisionist interpretation of World War II history. He attempts to redefine the nature and operation of cryptocurrencies based on his own untenable assumptions, leading to proposals such as "establishing listing rules similar to those in the stock market."
If the regulations he proposed are actually implemented, the Korean market will actually lose its appeal. Projects are willing to hire locals and invest money in South Korea precisely because they understand the value of listing on a South Korean exchange.
When we start regulating based on outdated thinking, we end up accomplishing nothing.
I believe Lee Yi-hwan's worldview is rooted in a protectionist mentality that stems from the economic turmoil of the late 1990s. He was 30 years old during the 1997 Asian financial crisis.
But everything is changing. South Korea has changed, and we need to adapt even faster. We are no longer a catching-up emerging nation; we are a powerful economy with a solid consumer base and a high per capita GDP. We no longer rely on producing toasters and wigs to make our mark.
As our population ages, we are losing our edge in manufacturing. We must transform our national business model up the value chain, and now is the perfect time for us to do so.
