South Korean regulator seizes control of a cryptocurrency exchange
Experts anticipate further disruption as the crypto sector evolves and a younger generation views status and job security differently.
For the first time, a government employee from South Korea’s top financial regulatory body has resigned to pursue a career in the cryptocurrency market. The complete identity of the official who submitted his or her resignation letter has not been released, nor has the cause for the departure been divulged. That hasn’t deterred local media and specialists from speculating on the significance of this uncommon decision. While the ideas vary, they all agree on one point: more regulators will enter the crypto business.
According to a South Korean news source, a Financial Services Commission (FSC) deputy director named Seo submitted his resignation this month from the FSC’s financial sector section and intends to work for bitcoin exchange Bithumb. Acceptance and consideration of the resignation are required under government ethics regulations. Earlier this year, a Financial Supervisory Service deputy director general transferred to cryptocurrency Upbit.
The FSC is responsible for financial policy and the management of the whole financial industry. It started exercising jurisdiction over the cryptocurrency sector in 2020, enacting regulatory regulations for virtual asset enterprises. Bithumb was founded in 2014 and has grown to become the country’s second biggest virtual asset trading platform, behind Upbit. Along with Upbit, Coinone, and Korbit, it is one of only four exchanges in Korea authorised to provide cash-to-crypto services.
South Korea’s bitcoin market has been positive on average this year. Just last month, the four exchanges’ combined trading volume exceeded 390 trillion Korean won, or US$329.9 billion. The news of a top regulator resigning from a high-ranking government position to work in the somewhat unstable virtual asset business may come as a surprise to a significant number of Koreans who live in a nation where government employment are greatly sought after. Nearly 200,000 persons sought to sit for this year’s test at the lowest level of the civil service (grade 9); the quota was around 5,600.
Therefore, why do experts believe that banking regulators are fleeing cryptocurrency? “This is because the interests of the FSC’s public authorities and the virtual asset exchange are aligned,” said Park Sung-jun, director of Dongguk University’s blockchain research centre. “Because the FSC officials have possibilities to get insight into the present state and future of the virtual asset market, they are taking a gamble by moving.”
According to Park, although South Korean officials are prohibited from taking jobs that might create a conflict of interest with their present position, this restriction does not apply in this case, since virtual asset exchanges are not legally classified as financial organisations. However, with the projected passage of a legislation regulating the virtual asset business in 2022, financial regulators may soon face limits – which is why we may see more government employees enter the crypto field.
According to one FSC official, the younger generation of employees is wired differently – they place a lower premium on integrity and have a diminished sense of responsibility. According to the official, work-life balance and recognition of individual performance are greatly valued by the present generation. The FSC is well-known for its rigid and closed-minded work culture. Park asserts that a shift in the FSC’s work culture is critical if they are to avoid further departures.
For South Koreans, being a high-ranking government employee has traditionally been seen as a lifetime honour. However, an exodus from the civil service to the crypto industry may indicate that crypto, which has already disrupted the monetary system, financial, and communications industries, is now disrupting work and life balance in Korea, as a younger generation reconsiders the value of job stability and status.