FSS Governor meets virtual asset CEOs, "Please strive for company-wide internal controls"

FSS Governor meets virtual asset CEOs, "Please strive for company-wide internal controls"

"High-risk products seeking short-term performance and provocative events lead to loss of trust"

On the 2nd, Lee Chan-jin, Governor of the Financial Supervisory Service (FSS), urged the virtual asset industry to strengthen company-wide internal controls to ensure its healthy development.

Governor Lee held a meeting with CEOs of 15 major virtual asset service providers on that day to discuss strengthening internal controls, protecting users, and enhancing market surveillance functions.

Governor Lee diagnosed that although the virtual asset market somewhat stagnated in the first half of this year due to money moves and incorrect Bitcoin payments, its base is expanding thanks to various attempts using stablecoins, integration with existing finance based on blockchain technology, and institutional arrangements for asset tokenization.

He then urged them to strive for company-wide internal control reinforcement to restore market trust and leap into a regulated industry.

Governor Lee said, "The foundation of market trust lies in the control system that operates daily within the company, prior to strong public regulations or ex-post sanctions. Please pay special attention and effort to building and operating a company-wide internal control system for sustainable development and substantial growth."

He also asked them to actively respond to various institutional changes.

With the enactment of the Digital Asset Framework Act currently being promoted and the virtual asset-related regulatory framework, including amendments to the Act on Reporting and Using Specified Financial Transaction Information and the Foreign Exchange Transactions Act, being overhauled, he stated, "Please thoroughly prepare by closely checking the status of legal revisions to prevent any gaps in regulatory compliance."

Governor Lee urged, "Exchanges should also proactively strive to enhance market surveillance capabilities so that they can faithfully perform their role in preventing and detecting unfair trading."

He then promised, "The FSS will also do its best to eradicate unfair trading by strengthening market monitoring functions using artificial intelligence (AI) and further advancing the investigation system."

He also emphasized responsible management with user protection as the top priority.

He stated, "Before asserting the 'principle of user responsibility,' we must carefully consider whether a product is appropriate from the user's perspective, whether relevant information is sufficient, and whether the user damage prevention and relief system is reasonable."

He particularly added, "Remember that launching high-risk products that only pursue short-term performance, provocative events, belated disclosure of insufficient information, and shifting losses to well-intentioned users will ultimately lead to the loss of user trust."

Industry CEOs stated that they would not only comply with laws but also faithfully implement self-regulation related to transaction support, advertising, and promotion, and would establish and strengthen internal controls in all business processes.

However, they also mentioned that gradual regulation is necessary, considering the differences in business and personnel scale among operators, such as the number of users and scope of operations.

Additionally, they requested policy support, including the establishment of relevant systems, for the global competitiveness and innovative services of the domestic virtual asset industry, and Governor Lee conveyed that the FSS would also strive to resolve the challenges that the virtual asset industry must overcome to leap into the regulated sector.