South Korea plans to establish a "Virtual Asset Department" by the end of June, aiming to protect user assets, with public officials prohibited from holding virtual assets.

The Financial Services Commission of South Korea plans to establish a "Virtual Asset Division" by the end of this month and complete the appointment of the department head. This new division, under the Financial Innovation Bureau, will be responsible for policies related to virtual assets.

According to sources in the financial investment industry, the Financial Services Commission is expected to establish the Virtual Asset Division by the end of June and appoint a department head. To facilitate this, the Financial Services Commission has applied to the Ministry of Personnel Management for organizational restructuring. Officials from the Financial Services Commission stated, "Originally, virtual asset-related policies were handled by the Financial Innovation Division, but the newly established Virtual Asset Division will also be under the Financial Innovation Division."

With the surge in cryptocurrency-related crimes, South Korea plans to upgrade the temporary task force to a formal investigative department.

Implementation of the "Virtual Asset User Protection Act"

The main reason for the establishment of the Virtual Asset Department by the Financial Services Commission is to prepare for the upcoming "Virtual Asset User Protection Act," which will be implemented on July 19. The Act includes minimum requirements to protect virtual asset users and will also advance to the second stage of substantive regulation.

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Training and Personnel Arrangements for Virtual Asset Investigators

As a result, the South Korean Financial Services Commission is providing relevant training for virtual asset investigators. However, the director and department staff have not been confirmed yet. The Commission is also considering banning public officials under its jurisdiction from holding virtual assets while contemplating the establishment of the Virtual Asset Department.

South Korean Government Officials Prohibited from Holding Virtual Assets

On June 29, the South Korean Financial Services Commission implemented the "Guidelines for Restricting Public Officials of the Financial Services Commission from Holding Virtual Assets." According to these guidelines, public officials in positions with restrictions on holding virtual assets or belonging to restricted departments are prohibited from holding virtual assets, and violators will face disciplinary actions. Additionally, if public officials acquire virtual assets through inheritance or gifts, they must report it within 10 days and sell them within a month.

These guidelines apply to the Financial Innovation Department responsible for virtual asset business, the Financial Intelligence Unit (FIU), as well as all departments of the Capital Markets Bureau and the Banking Bureau of the Financial Industry Bureau to enhance fairness and transparency in virtual asset-related matters.

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Taiwan Still Discussing Special Laws, Establishing Departments, "Investor Protection" is Still Far Away

The Financial Supervisory Commission of Taiwan has issued guidelines based on anti-money laundering laws, established a discussion forum with the Virtual Currency Association for self-regulation, and is currently considering special laws and establishing dedicated departments. However, the special laws are still under discussion, and it is expected that the proposal will not be introduced until 2025, with no definite timeline for actual legislation.

The Financial Supervisory Commission of Taiwan, focusing on "anti-money laundering" and "anti-fraud," tends towards passive regulation, with a scarcity of manpower in related departments; virtual currency association operators currently include exchanges and currency traders, each with different interests and business scopes, and are calculating their own directions for self-regulation without a clear consensus.

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In contrast to various legal jurisdictions in Asia, countries like Japan, Singapore, Hong Kong, Thailand, Malaysia, have more detailed regulations and enforcement regarding cryptocurrency laws, not limited to just "anti-money laundering" and "anti-fraud," but based on "investor protection."

Taiwan's gray area is not only the invisible champion of web3 regulation arbitrage but may also become an underground hotbed for global cryptocurrency crime.

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