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By Lee Min-hyung
Korea's financial authorities should introduce a similar level of regulation to the cryptocurrency market as rules concerning legacy banks, since any possible financial fiasco from crypto trading may end up causing serious damage to the real economy, the Bank of Korea (BOK) said in a report Thursday.
"If the usage of stablecoins widens, this will cast an influence on the overall financial stability here ― including the current monetary and payment systems," the central bank noted. "Financial authorities should enhance the efficiency of regulations by building a close cooperation system in terms of crypto monitoring, information collection and supervision."
The BOK also called for the need for the government and watchdogs to regulate the industry with a similar perspective to legacy banks.
This reflects lingering fears of a possible recurrence of recent crypto debacles ― such as the Terra-Luna collapse and FTX bankruptcies ― which incurred huge losses to investors. But investors have failed to take specific actions against their losses due to the lack of regulatory guidelines.
The crypto shocks were caused by risks from the unsustainable business structures, unstable liquidity and opaque financial circumstances of market players ― all of which share a similar pattern with previous financial crises.
"Authorities should force crypto business operators to submit their external audit documents, and they need to share the information," the report noted.
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