S Korea’s New Top Regulator Faces Scrutiny Over Strategy Shares, Crypto Comments
South Korean lawmakers have criticized Lee Eok-won, the nominee for the post of chairman at the Financial Services Commission, for buying shares in the Bitcoin (BTC)-keen US firm Strategy.
Per the South Korean media outlets Jose Ilbo and News1, Lee Eok-won claimed that he had only invested in blue-chip US stocks “in order to see what investor sentiment is like.”
Lee Eok-won was speaking in response to lawmakers at a National Assembly confirmation hearing on September 2.
Strategy Shares Controversy for FSC Nominee
The FSC is the country’s top financial regulator and has the final say on the country’s crypto regulations. However, President Lee Jae-myung has previously called for the FSC’s abolition.
Lee Eok-won, South Korea’s Former Vice Minister of Strategy and Finance and the nominee for the post of Financial Services Commission chairman, taking questions from lawmakers at the National Assembly on September 2. (Source: NATV/Screenshot)Recent developments appear to suggest that the President may have reversed or delay his plans to scrap the FSC.
Several lawmakers and media outlets have criticized the choice of Lee Eok-won as FSC chairman after discovering he has a large portfolio of overseas shares, including NVIDIA and Tesla stocks.
Critics say that this runs counter to the President’s policies. Lee Jae-myung wants to breathe new life into the domestic stock market, which has stagnated for several years.
‘Not a Good Look for Gov’t’
The main opposition People Power Party lawmaker Kim Sang-hoon took aim at the government, saying:
“[Nominating Lee Eok-won] is not a good look for this administration, which is supposedly trying to usher in the era of the ‘KOSPI 5,000.’”
The government launched a special KOSPI 5,000 committee in late June, as part of a bid to boost the value of the domestic market by over 50%.
KOSPI index prices over the past five years. (Source: Google Finance)PPP lawmakers called Lee Eok-won’s nomination “inappropriate” due to his holdings in firms like Strategy, the world’s largest Bitcoin treasury company. The nominee responded:
“I wasn’t good at dealing with stocks [during my time at the ministry]. [After I left the post,] I went out and got some market experience. I wanted to see how the stock market worked and see what investor sentiment was like.”
Kim, a member of the National Assembly’s Political Affairs Committee, said:
“Who would choose invest in the KOSPI when [the FSC Nominee] is focusing on US stocks instead of the domestic market?”
‘No Intrinsic Value in Crypto’
Lee Eok-won was appointed as the first deputy minister of the Ministry of Economy and Finance in March 2021.
Recently submitted data shows that the nominee’s total stock and fund investments are worth 71.26 million won (over $51,000). He invested almost $8,000 of this amount in direct US stock purchases, including Strategy shares.
Lee Eok-won has also faced criticism this week from crypto advocates after his comments on the value of cryptoassets.
The nominee said that BTC and other coins have “no intrinsic value” and could not be classified as currencies or financial products.
He also poured cold water on talk that the government and pension funds could be allowed to launch strategic Bitcoin reserves.
Domestic crypto advocates claim that statements like these sound like they belong to a bygone era. They say that regulatory chiefs in South Korea made similar comments during the Bitcoin boom of 2017-2018.
Critics Call Comments ‘Outdated’
News1 wrote that several crypto industry insiders think that Lee Eok-won’s attitude lags “behind global trends.”
An unnamed crypto industry employee said that Lee Eok-won’s comments reflected “an invalid and inappropriate opinion. The same individual said:
“The argument that crypto has no intrinsic value is inappropriate at a time when large US and other global corporations are using cryptoassets as strategic reserves. Cryptoassets like Bitcoin possess digital utility, including security and transferability.”
Lee Eok-won was non-committal when asked about the chances of the FSC approving a Bitcoin ETF. He said:
“I understand that there are various expectations and concerns about the impact of introducing a Bitcoin spot ETF. We will assess global regulatory trends to establish a possible method of introduction […] and discuss the matter with the National Assembly.”
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