Financial Services Commission Chairman nominee Koh Seung-beom expressed skepticism on Wednesday over the value of cryptocurrency as a financial asset, confirming his tone in line with the regulator’s move to tighten its grip on local crypto exchanges.

“International organizations, including the Group of 20 and the International Monetary Fund, as well as a lot of market experts, find it difficult to consider virtual currencies as a financial asset, and think they could not function as a real currency,” Koh said in a written answer to questions posed by the National Assembly‘s National Policy Committee ahead of his confirmation hearing, slated for Friday. 

He reiterated the government’s rejection to acknowledge cryptocurrency as a viable asset class. The FSC’s incumbent chief Eun Sung-soo in April voiced concern about the recent crypto frenzy, saying “cryptocurrencies, which have no intrinsic value, are not a real currency.” 

Coin trading gained momentum boosted by ample liquidity amid the COVID-19 pandemic, with the price of a bitcoin in the country topping 80 million won ($71,800) for the first time in mid-April, industry data showed.

South Korea has been imposing tougher rules on crypto transactions.

Under the revised Act on Reporting and Using Specified Financial Transaction Information, which took effect in March with a six-month grace period, all virtual asset service providers are allowed to begin operations after reporting their business status to the Financial Intelligence Unit -- an anti-money laundering unit under the FSC -- which requires them to acquire verifiable accounts in their real names from local banks, while taking anti-money laundering measures.

A total of 21 local crypto operators, including the four biggest exchanges of Bithumb, Upbit, Coinone and Korbit, had registered with the FIU as of the end of July, the FSC said in a statement. 

Born in 1962, Koh, who previously served as a member of the Bank of Korea’s rate-setting board, graduated from Seoul National University in 1985 and took on major senior posts at the Ministry of Economy and Finance and the FSC after passing the civil service exam in 1984. 

Having spent most of his career as a public servant, he is well known as an expert with extensive experience in making economic and financial policies in the fields of household debt, the capital market and corporate restructuring. 

As for soaring household debt, Koh vowed to push for strong policy measures if his nomination is approved by parliament, adding “it is very urgent to get rid of macroeconomic risks stemming from household debt because households’ high indebtedness could lead to an asset bubble, a major threat to the nation’s fiscal soundness.”

By Choi Jae-hee  (cjh@heraldcorp.com)