South Korea Plans to Promote a Free Crypto Market Approach

• South Korea’s FSS Governor raises concerns over crypto exchanges’ competitive interest rates.
• The Governor reveals the country’s plans to promote a free crypto market approach.
• The FSC Chairman highlights the significant impact of interest rates on crypto prices.

Lee Bok-hyun, Governor of South Korea’s Financial Supervisory Service (FSS), suggested the country may adopt a free market approach to crypto. During a parliamentary audit, the governor addressed concerns about competitive crypto interest rates on exchanges like Bithumb. As part of the Virtual Asset User Protection Act, the regulator is creating a flexible regulatory framework to ensure customer safety.

At the same time, Financial Services Commission (FSC) Chairman Kim Byoung-hwan noted the sensitivity of managing interest rates. He stressed their impact on prices and expressed a preference for voluntary solutions from exchanges.

South Korea began implementing new crypto regulations focused on customer protection on July 19 with the Virtual Asset User Protection Act. The FSS has already started enforcing these regulations, meeting with top crypto exchanges like Upbit, Bithumb, Coinone, Korbit, and Gopax. The regulator discussed deposit usage fees and addressed disagreements on appropriate fee levels.

Read also: South Korea May Soon Allow Bitcoin Spot ETFs

The interest rate competition also started on July 19, with leading exchanges announcing their rates. Upbit began with a rate of 1.3%, while Bithumb offered 2%. Upbit then raised its rate to 2.1%, prompting Bithumb to increase its rate to 2.2%. Korbit entered the competition with a higher rate of 2.5%. Bithumb tried to raise its rate to 4%, but the FSS intervened, forcing the exchange to reverse the increase.

This regulatory action comes as South Korea investigates crypto market manipulation, including tokens like AVAIL and NFP. The country’s National Assembly is conducting a detailed investigation into AVAIL, while the exchange Coinone has hired law firms to investigate NFP.