The financial watchdog in South Korea is creating new instruments to continuously monitor crypto threats. While the crypto market’s influence on the conventional financial system is presently minimal, the regulator cautioned that in the future, such threats to the nation’s financial stability could rise significantly.
Developing Crypto Monitoring Tools is a Korean Regulator
FSS Governor Lee Bok-hyun reportedly disclosed Monday at a conference on the interconnectedness between the crypto market and the traditional financial market that the Financial Supervisory Service (FSS) of South Korea plans to develop crypto monitoring tools and regularly inspect the risks associated with crypto assets. The Financial Supervisory Service is preparing a number of efforts for the risk management of the virtual asset market this year, he was reported as saying by the local media.
Regarding the crypto monitoring tools, Lee clarified that despite the predicted growth in the degree of interconnectedness between the crypto market and the regular financial system, the supervisory authority now lacks data to identify potential dangers from crypto.
Data security, the FSS director emphasized, “is more crucial than anything else in order to prevent hazards in the virtual asset market.” Lee also stated that the agency intends to create new disclosure requirements for cryptocurrencies.
The Effect of the Crypto Market on the Traditional Financial Market
The FSS governor pointed out that no domestic financial institution directly offers services connected to cryptocurrencies and added that, despite the virtual asset market’s expansion, its direct influence on the stability of the financial system is currently minimal. The impact on financial stability, though, could increase dramatically if the domestic crypto market grows significantly, Lee said.
Regulators have issued warnings that the traditional financial industry and the cryptocurrency market are becoming more intertwined. Following the collapse of the Terra-luna ecosystem, the FSS chief said that a number of nations are “introducing full-fledged regulatory procedures for stablecoins.”
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