For the first time, a government official at the top financial regulatory agency in South Korea has resigned to take a job in the crypto industry. The full name of the official who has applied for resignation has not been disclosed, nor the reason behind the departure. That hasn’t stopped local media and experts from speculating about what this unusual move means. While the theories differ, there is one opinion they agree on — that more regulators will jump to the crypto industry.
According to a South Korean news report, a Financial Services Commission (FSC) deputy director named Seo has tendered his resignation from the FSC’s financial industry department this month, and plans to work for cryptocurrency exchange Bithumb. The resignation must be accepted and pass review under government ethics rules. Earlier this year, a deputy director general at the Financial Supervisory Service relocated to cryptocurrency Upbit.
The FSC oversees financial policies and manages the entire financial sector. From 2020, it began exerting authority over the crypto industry, establishing mandatory requirements for virtual asset businesses. Bithumb was established around 2014 and has become the second largest virtual asset trading platform in the country after Upbit. It is one of the only four exchanges in Korea — along with Upbit, Coinone and Korbit — that are licensed to operate cash-to-crypto services.
The cryptocurrency market in South Korea this year on average has been bullish. Just last month, the total trading volume among the four exchanges reached over 390 trillion Korean won, or US$329.9 billion. The news of a senior regulator relinquishing a high-level public official role to work in the comparatively unstable virtual asset industry may be a shock to a fair amount of Koreans who live in a country where government jobs are highly coveted. Nearly 200,000 people applied to take this year’s exam for the lowest ranked civil service level (grade 9); the quota was around 5,600.
So why do experts think we are seeing a crypto exodus among financial regulators?
“This is because the interests of the FSC’s public officials and the virtual asset exchange are in line,” said Park Sung-jun, head of the blockchain research center at Dongguk University. “The officials at the FSC have opportunities to attain insight on the current situation and the future of the virtual asset industry, so they are taking their chances by making the move.”
Park explains that although South Korean officials are restricted from moving to a job where there may be a conflict of interest with the current position, that does not apply in this situation, since virtual asset exchanges are not officially considered financial institutions. But with the law on the virtual asset industry expected in 2022, financial regulators may soon face restrictions — hence why we may see more government officials rush into the crypto space.
One FSC official told the media that the younger generation of workers is wired differently — they see less value in honor and have less sense of duty. The official claims that work-life balance and reward to individual achievement is rated highly among the current generation. The FSC is known to have a very strict and close-minded work culture. Park says a change in the FSC’s work culture is crucial, or else they will continue seeing departure.
Becoming a high-level government official has long been considered a lifelong honor for South Koreans. But an exodus from civil service to the crypto industry could indicate that crypto, already disrupting the monetary system and financial and communications industries, may now be disrupting work and life balance in Korea as a younger generation reevaluates the importance of job stability and status.