Criticism is being faced by South Korea’s Financial Services Commission nominee for having the evolving market role of crypto underestimated.
Lee Eok-won, the nominee to head South Korea’s Financial Services Commission, drew heavy criticism this week after crypto was dismissed as lacking any real value in his written testimony ahead of confirmation hearings, as was reported by local media on Sept. 1.
It was said by Lee that digital assets do not possess intrinsic worth in the same way as equities or bank deposits. It was argued by him that their price swings undermine their ability to act as money. It was further stated by him that the extreme volatility that is experienced by digital assets makes them unsuitable as a store of value or as a medium of exchange.
Lee’s position is consistent with the government’s view that digital assets are neither legal tender nor financial products under the financial regulatory regime.
A warning was issued by the FSC chair nominee against allowing retirement and pension funds to have them invested in the sector. However, openness to regulating stablecoins was expressed by him, and it was noted that they could be managed with safeguards while leaving room for innovation.
Industry Rejects Regulator’s Crypto Stance
The remarks were rejected by the country’s blockchain sector, with many in the industry arguing that the statement ignores the revenue and adoption that are being generated across the industry.
Since 2022, a surge in crypto adoption has been seen in South Korea. The number of investors has grown from about 9.7 million to more than 16 million by early 2025. This represents over 30% of the population and a growth of more than 60% in just over two years.
Trading activity on local exchanges has at times had stock market volumes exceeded, and total holdings have been climbed above 102 trillion KRW ($70 billion), which highlights how a mainstream investment choice has rapidly been made of digital assets for South Koreans.
An analyst at Xangle, which is a local data firm, accused Lee of relying on outdated arguments that were once common among traditional finance leaders.
Recent token buybacks and revenue streams from platforms like Hyperliquid, Tron, and Ethena were pointed to by him as evidence of value creation that is comparable to corporate stock buybacks.
Balancing Act: Regulators’ Caution and Growing Crypto Demand
Restrictions have been reinforced by South Korean regulators in recent months as retail interest continues to climb in the country.
Domestic asset managers were advised by the Financial Supervisory Service to scale back holdings in crypto-related stocks. At the same time, exchanges were ordered by the FSC to stop providing lending services that were backed by digital assets or fiat deposits.
Despite the tighter stance, retail enthusiasm for crypto continues to climb. Hundreds of millions of dollars’ worth of Tesla stock was sold off by investors in August, the largest disposal since early last year. At the same time, funds were directed into crypto proxies like BitMINE, which recently became the biggest Ethereum holder.
A steep decline in South Korean purchases of major U.S. tech shares was also shown by the data compared with earlier this year.
Open questions are being left by the contrasting positions between regulators and investors about how caution will be balanced by President Lee Jae-myung’s administration with the public’s growing appetite for digital assets.
