South Korea's Push for a Secure and User-Focused Digital Asset Ecosystem

The Financial Supervisory Service (FSS) of South Korea, under the leadership of Governor Lee Chan-jin, has underscored the dual priorities of user protection and market stability in the nation’s burgeoning digital asset sector. In his first official engagement with CEOs from major virtual asset firms, Governor Lee laid out a vision for sustainable growth in the sector, driven by ethical practices and technological innovation.

Held on October 30 at the Dream Plus venue in Gangnam, Seoul, the meeting brought together executives from prominent Korean cryptocurrency exchanges and related businesses to chart a cooperative path forward. Governor Lee highlighted how digital assets have rapidly evolved from speculative investments to influential players in the global financial system, propelled by technological advancements. He remarked, “In Korea, policies aimed at developing a digital asset ecosystem are paving the way for its substantial growth.”

The Case for Ethical and Responsible Management

Governor Lee was direct in addressing the responsibilities of the industry, stressing that long-term progress depends on user-centric operations. “Progress is only achievable when users are perceived as partners for mutual growth, rather than mere sources of profit,” he said. To align digital assets with conventional financial products, he called for embedding responsible management practices into the fabric of the sector.

Lee urged virtual asset firms to prioritize consumer protection above all else. This includes eschewing short-term profit-driven schemes and avoiding the unchecked promotion of high-risk, speculative financial products. “User protection must be positioned as the highest priority in management strategies,” Governor Lee emphasized.

Another crucial recommendation was for companies to allocate more resources to create fair and transparent trading environments. Strengthening market surveillance mechanisms was specifically flagged as essential for fostering trust among users. “Expanding market surveillance teams and personnel is no longer optional—it’s a necessity,” Lee asserted.

IT Security: A Cornerstone of Competitiveness

Governor Lee pointed out the increasing significance of IT security as a determinant of success in the virtual asset industry. “The foundation of any virtual asset service provider’s competitiveness lies in its IT security,” he explained. Firms were encouraged to make strategic investments in building robust IT infrastructures capable of ensuring operational stability.

He also discussed the need to enhance market surveillance systems, not only to boost fairness but also to establish the financial integrity of the ecosystem. “Strengthening public trust through enhanced surveillance functions is non-negotiable,” Lee said, reiterating the importance of fairness in the market.

The FSS plans to implement advanced monitoring frameworks using AI-driven analysis tools and cutting-edge on-chain analytics to oversee market activities more effectively. Additionally, the regulator aims to introduce mechanisms for recovering illicitly obtained funds, reflecting its strong stance on regulatory compliance and financial integrity.

Industry Commitments and Calls for Government Support

The dialogue included the participation of leaders from four major Korean won-based exchanges, including Dunamu (Upbit), Korbit, and Coinone, alongside three coin-only exchanges, such as Dolphin and Foblgate, and three custodial service firms. The notable absence of Bithumb, Korea’s second-largest exchange by trading volume, drew attention, as it coincided with controversies surrounding its recent business decisions.

During the discussions, industry representatives pledged to prioritize user protection as a central tenet of their operations. They affirmed their adherence to the recently enacted Virtual Asset User Protection Act and related regulatory guidelines. Additionally, the CEOs expressed a strong willingness to foster closer collaboration with the FSS.

However, the executives also made it clear that institutional support from the government is critical for the industry’s growth. They emphasized the need for regulatory frameworks that balance oversight with fostering innovation. “We require a regulatory and institutional framework that ensures fair competition while enabling the digital asset sector's development,” they stated. Specific proposals included measures to enhance the global competitiveness of domestic firms and introduce user-led solutions to ensure convenience and fairness.

Bithumb’s Absence Sparks Speculation

The absence of Bithumb, a significant player in the local cryptocurrency space, did not go unnoticed. Reports suggest the company was excluded due to ongoing regulatory scrutiny surrounding its recent launch of a coin lending service and its partnerships to share order books with foreign exchanges. These moves have raised questions about their potential impact on the stability of the domestic market, drawing criticism from industry watchers and regulators alike.

A Collaborative Vision for the Future

This landmark meeting set an important precedent for how South Korea’s financial authorities and digital asset organizations can work together to shape a secure, ethical, and user-focused ecosystem. Governor Lee’s strong emphasis on sustainable growth, fairness, and consumer protection signals a pivotal moment in the maturation of the country’s digital asset industry.

By prioritizing trust, collaboration, and technological innovation, South Korea is positioning itself as a leader in the global digital finance landscape. Through carefully balanced policies and cooperative strategies, the nation is poised to foster a thriving and secure environment that benefits both market participants and the broader economy alike.