FSS chief urges 15 virtual asset CEOs to build company-wide internal controls

Financial Supervisory Service chief Lee Chan-jin met with top executives of the virtual asset industry Thursday, calling on them to strengthen company-wide internal controls for the healthy development of the sector.

Lee convened a meeting with CEOs of 15 major virtual asset businesses, including Dunamu, at Mapo Front One in Mapo-gu, Seoul, to discuss key issues including tighter internal controls, user protection and enhanced market surveillance.

Lee assessed that the virtual asset market had been somewhat sluggish in the first half of this year due to a MoneyMove fund-flow event and a bitcoin overpayment incident, but said the sector's base is expanding on the back of diverse experiments using stablecoins, the convergence of blockchain technology with traditional finance, and the regulatory groundwork being laid for asset tokenization.

"The foundation of market trust lies not in strong public regulation or after-the-fact sanctions, but in control systems that operate on a daily basis within each company," Lee said. "Please pay special attention and make every effort to build and operate a company-wide internal control framework for sustainable development and sound growth."

Lee also urged firms to respond proactively to a range of regulatory changes underway. With the enactment of the Digital Asset Basic Act and revisions to the Act on Reporting and Using Specified Financial Transaction Information and the Foreign Exchange Transactions Act in progress, he said companies should "closely monitor legislative developments and prepare thoroughly so that no gaps in regulatory compliance arise."

"Exchanges should also work proactively to strengthen their market surveillance capabilities so they can faithfully carry out their role in preventing and detecting unfair trading," Lee said. He added that the FSS would do its utmost to stamp out unfair trading by leveraging AI to enhance market monitoring functions and further upgrade its investigation systems.

Lee said firms must also think carefully from the user's perspective — asking whether a product is suitable, whether sufficient information is provided, and whether systems for preventing and remedying user harm are reasonable — before invoking the principle of user self-responsibility.

"Bear in mind that launching high-risk products that chase only short-term earnings, running sensational events, disclosing insufficient information belatedly, and shifting losses onto good-faith users are all paths to losing user trust," he said. Lee had made a similar appeal at a first meeting with virtual asset industry CEOs in September last year, stressing the need to establish user-centered responsible management and urging firms to avoid competing through excessive events and high-risk product launches.

The CEOs said they would faithfully comply not only with laws and regulations but also with self-regulatory rules on trading support and advertising and promotion, and would strengthen internal controls across all business processes. They also noted, however, that significant differences in the scale of operations and staffing among individual businesses mean that gradual, proportionate regulation — taking into account user numbers and the scope of operations — is also needed.