South Korea’s financial regulator is developing new tools to monitor cryptocurrency-related risks on a regular basis. The regulator has warned that while the impact of the cryptocurrency market on the traditional financial system is still low, the risks posed by cryptocurrencies to the country’s financial stability could increase significantly in the future.
Korean regulator developing cryptocurrency monitoring tools
South Korea’s Financial Supervision Service (FSS) is planning to develop cryptocurrency monitoring tools and regularly inspect the risks associated with crypto assets, FSS Governor Lee Bok-hyun said on Monday at an interconnection conference between the cryptocurrency market and the traditional financial market. He was quoted in local media as saying:
The Financial Supervision Service is planning various initiatives this year to manage the risks of the virtual assets market.
Regarding cryptocurrency monitoring tools, Lee explained that the regulator currently lacks data to identify potential cryptocurrency risks even though the interconnection between the cryptocurrency market and the traditional financial market is expected to increase. .
“To respond proactively to risks in the virtual asset market, data protection is more important than anything else,” stressed the head of the FSS. Additionally, Lee said the regulator plans to establish new disclosure requirements related to cryptocurrencies.
The impact of the cryptocurrency market on the traditional financial market
The FSS governor noted that no domestic financial companies directly provide cryptocurrency-related services, adding:
Despite the growth of the virtual asset market, the direct impact on the stability of the financial system is still low.
However, if the size of the domestic crypto market expands significantly, its impact on financial stability could increase significantly, Lee warned.
Regulators around the world have warned that the interconnection between the traditional financial market and the cryptocurrency market is increasing. The head of the FSS pointed out that a number of countries are “introducing full-fledged regulatory measures for stablecoins” following the collapse of the Earth-Moon ecosystem.
What do you think of South Korea planning to regularly monitor the risks associated with the cryptocurrency market? Let us know in the comments section below.
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