South Korea’s FSC chief nominee faces backlash after calling crypto valueless

Lee Eok-won, the nominee to chair South Korea’s Financial Services Commission, stated that cryptocurrencies have no intrinsic value, a characteristic that distinguishes them from traditional financial products such as deposits and equities.

His comment appeared in a written response submitted ahead of his confirmation hearing as the prospective head of the country’s top financial regulator, according to local news agency News1.

Lee wrote that, due to their high price volatility, cryptocurrencies cannot fulfill the essential functions of a currency, such as serving as a store of value or a medium of exchange.

He also expressed skepticism about allowing pension and retirement funds to invest in crypto assets, citing concerns over the market’s volatility and speculative nature.

The FSC chair nominee also touched on the subject of local crypto exchange-traded funds (ETFs), which the FSC has been exploring a plan to allow local firms to launch spot crypto funds. While Lee stated that there are existing concerns around the funds, he said he will work with lawmakers to advance the project.

According to the News1 report, Lee's comment on cryptocurrencies sparked backlash from local industry players, who touted his comments as regressive, especially at a time when different governments and corporations are actively adopting crypto into their balance sheets and strategies.

Other blockchain experts reportedly argued that bitcoin and other crypto have sufficient practical value, in their "digital utility," such as security and transferability on the blockchain network, the report said.

Pro-stablecoin

Meanwhile, Lee expressed a different stance on stablecoins , stating he would seek to balance opportunities for innovation with appropriate safety measures.

Endorsed by President Lee Jae Myung , South Korea is advancing a plan to regulate a local currency-pegged stablecoin market. This move aligns with a broader global trend, as regions including Japan, Hong Kong, and China are also exploring local currency stablecoins to protect and promote their monetary sovereignty in the Web3 era. 

The country's potential new Financial Services Commission chair appears to be following this same strategy, cautiously preparing to join the stablecoin movement but maintaining a skeptical view of other cryptocurrency innovations.