The South Korean financial regulator is now implementing new instruments to monitor the risks associated with cryptocurrency assets on a regular basis. The regulator highlighted that although the influence of crypto markets on traditional financial systems is currently low, potential risks could emerge in the future.
Korean Financial Watchdog Creates Crypto Risk Monitoring Tools
The South Korean Financial Supervisory Service FSS intends to create cryptocurrency risk monitoring tools, and inspect the related risks on a regular basis. This development was reportedly revealed by Governor Lee Bok-hyun on Monday during a conference on the intersection between cryptocurrency and traditional financial markets. Lee was quoted as saying:
The Financial Supervisory Service has various initiatives planned for risk management in this year’s virtual asset market.
Concerning the cryptocurrency monitoring tools, the supervisory authority does not currently possess the required data to identify potential risks associated with cryptocurrencies. Nevertheless, it is expected that the growing connection between cryptocurrency markets and traditional financial markets will offer a much-needed boost.
“In order to respond proactively to risks in the virtual asset market, securing data is more important than anything else,” Lee highlighted. In addition, the regulator noted that it wants to introduce new disclosure requirements for cryptocurrencies.
Impact of Crypto Markets on Traditional Financial Systems
The FSS governor noted that no domestic financial company directly provides cryptocurrency-related services, adding:
Currently, the direct effect of the growth of the virtual asset marketplace on the stability and viability of the financial system remains low.
Nevertheless, the impact of financial stability could be significantly increased if the cryptocurrency market in South Korea expands, Lee warned.
Regulators across the world have warned that there is a growing connection between traditional financial markets and crypto markets. The FSS head remarked that many countries are “introducing comprehensive regulatory measures for stablecoins” in light of the collapse of the Terra-luna ecosystem.
What do you think? Is South Korea planning to monitor the risks associated the crypto market regularly? Let us know your thoughts in the comments section.
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