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"High-risk products seeking short-term performance and provocative events lead to loss of trust"
On the 2nd, Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), urged the virtual asset industry to strengthen company-wide internal controls to ensure its healthy development.
Governor Lee held a meeting with CEOs of 15 major virtual asset service providers today to discuss strengthening internal controls, protecting users, and enhancing market surveillance functions.
Governor Lee diagnosed that although the virtual asset market was somewhat stagnant in the first half of this year due to money moves and incorrect Bitcoin payments, its base is expanding thanks to various attempts using stablecoins, integration with existing finance based on blockchain technology, and the establishment of systems for asset tokenization.
He then requested them to strive for strengthening company-wide internal controls to restore market confidence and leap into the institutionalized industry.
Governor Lee stated, "The foundation of market trust lies in the control system that operates daily within the company, rather than strong public regulations or ex-post sanctions. Please pay special attention and effort to the establishment and operation of a company-wide internal control system for sustainable development and substantial growth."
He also urged them to actively respond to various institutional changes.
Currently, the enactment of the Digital Asset Basic Act is being pursued, and the regulatory framework related to virtual assets, including amendments to the Specific Financial Information Act and the Foreign Exchange Transactions Act, is being revised. In this situation, he said, "Please meticulously check the status of legal revisions and thoroughly prepare to ensure there are no gaps in regulatory compliance."
Governor Lee requested, "Exchanges should also proactively strive to enhance market surveillance capabilities so that they can faithfully perform their roles in preventing and detecting unfair trading."
He further promised, "The FSS will also do its best to eradicate unfair trading by strengthening market monitoring functions using artificial intelligence (AI) and further advancing the investigation system."
In addition, he emphasized responsible management with user protection as the top priority.
He said, "Before asserting the 'principle of user responsibility,' one must carefully consider from the user's perspective whether the product is suitable, whether relevant information is sufficient, and whether the user damage prevention and relief system is reasonable."
He specifically added, "Remember that launching high-risk products that only pursue short-term performance, provocative events, belated disclosure of insufficient information, and shifting losses to innocent users will ultimately lead to the loss of user trust."
Industry CEOs stated that they would faithfully implement not only legal compliance but also self-regulations related to transaction support, advertising, and promotion, and would reorganize and strengthen internal controls in all business processes.
However, they also mentioned that gradual regulation considering the number of users or scope of business is necessary, as there are significant differences in business and personnel scale among operators.
Furthermore, they requested policy support, such as the establishment of relevant systems, for the global competitiveness and innovative services of the domestic virtual asset industry. Governor Lee responded that the FSS would also strive to solve the challenges that the virtual asset industry must overcome to leap into the institutionalized sector.
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