South Korea Warns of Crypto Wealth Outflow Amid Global Regulatory Shifts

An expert has issued a warning that a potential "crypto killer app" could emerge overseas and significantly impact South Korean wealth. Kim Min-seung, the head of the Research Center at the domestic crypto exchange Korbit, expressed this concern during a crypto investment forum held in Yeouido, Seoul. According to Kim, the Korean government's restrictive approach to crypto regulation could lead to an outflow of national wealth.

Kim highlighted that previous "killer apps" such as Facebook and Instagram have already drawn significant funds out of South Korea by capturing domestic advertising revenue. He cautioned that a "crypto killer app" could have an even more profound impact by "sucking up South Korea’s wealth." This warning comes as the US government is relaxing regulations in the tech sector, increasing the likelihood of a global crypto platform emerging soon.

Other experts at the forum echoed Kim's concerns. Rahul Advani, Ripple’s Head of Public Policy for the Asia Pacific region, suggested that South Korea should focus on developing a strong custody system aligned with international standards. He praised the Financial Services Commission’s recent roadmap, which aims to gradually allow institutional players to access the crypto market, as a step in the right direction. However, Advani emphasized that crypto custody has become a critical area of regulation as institutional adoption rises, and safe custody solutions are essential for market development.

Kim Yong-beom, the CEO of Hashed Open Research, also warned that South Korea is lagging behind the United States in crafting rules for the crypto sector. He noted that the US views crypto assets like Bitcoin and stablecoins as a means to secure the continuation of the dollar hegemony, actively integrating them into its financial system. In contrast, South Korea sees these assets primarily as targets of regulation, with no Bitcoin spot ETFs approved to date.

Robert Michnick, BlackRock’s head of digital assets, added that this year will be crucial for major investment institutions deciding whether to include Bitcoin in their asset portfolios. He noted that Bitcoin stockpiling plans discussed at the federal government level in the United States are now spreading to state governments, indicating a growing institutional interest in treating Bitcoin as a financial asset.

Overall, the forum highlighted a consensus among experts that South Korea's regulatory stance on crypto falls short of global standards. The potential emergence of a "crypto killer app" overseas poses a significant risk to South Korean wealth, underscoring the need for the country to adapt its regulatory framework to keep pace with international developments in the crypto sector.