Regulators Clash with Crypto as Youth Fuel South Korea’s Digital Gold Rush

South Korea’s Financial Services Commission (FSC) chief nominee, Lee Eok-won, has drawn criticism from the crypto industry for his dismissive stance on digital assets. In written responses to lawmakers ahead of his confirmation hearing, Lee stated that cryptocurrencies exhibit extreme price volatility, lack monetary function, and have no intrinsic value. He emphasized that, unlike traditional financial products such as deposits or securities, virtual assets are not supported by tangible or regulated underpinnings [1]. His remarks, reported by local media News1, highlight concerns that cryptocurrencies cannot serve as a reliable store of value or medium of exchange [2].

The comments have been met with pushback from industry players. An anonymous official from a South Korean crypto firm argued that the notion of crypto having no intrinsic value is flawed, especially as global corporations and the U.S. maintain crypto as a strategic reserve. They noted that assets like Bitcoin offer digital utility supported by blockchain technology and transferability [1]. Industry critics also pointed out that outright dismissal of crypto ignores its increasing integration into financial markets and the role of blockchain innovation.

Lee’s position on regulatory policy further underscores his cautious approach. He opposed allowing pension funds to invest in cryptocurrencies, citing concerns about the speculative nature and volatility of virtual assets. He stressed that retirement savings, designed to ensure stable income in old age, should not be exposed to high-risk markets [2]. In regard to crypto exchange-traded funds (ETFs), Lee acknowledged both public expectations and concerns, stating that the FSC would review global regulatory trends before determining a course of action in consultation with lawmakers [1].

However, Lee’s approach to stablecoins appears more open. He stated that the FSC would seek to foster innovation while ensuring adequate safeguards, reflecting a more balanced regulatory stance. This comes amid South Korea’s recent development of a won-backed stablecoin initiative, led by eight major banks, following President Lee Jae-myung’s campaign promises to expand the role of digital assets in the economy [2]. In addition, authorities are preparing to reclassify crypto-related businesses as venture companies, reversing a 2018 restriction that limited access to investment incentives for firms in the sector [2].

The context of Lee’s comments is notable given the rapid growth of crypto adoption among South Koreans. As of March, more than 16 million residents—over 30% of the population—had registered accounts on crypto exchanges. Analysts suggest that this surge, particularly among younger generations, is driven by economic pressures rather than a broad belief in blockchain technology. A product officer at a quantum machine learning startup noted that many young South Koreans are motivated by a desire for quick financial returns amid limited economic opportunities [1].

Source:

[1] South Korea's Incoming FSC Chief Slams Crypto As Youth ... (https://cointelegraph.com/news/south-korea-fsc-nominee-crypto-no-intrinsic-value)

[2] South Korea FSC Nominee Skeptical on Crypto as 16M ... (https://coincentral.com/south-korea-fsc-nominee-lee-eok-won-skeptical-on-crypto-as-16m-citizens-trade-digital-assets/)