Nominee for FSC chairman maintains caution on crpyto accounts for corporations, loan-limit tightening

Finance

Published: 22 Jul. 2024, 17:24 Updated: 22 Jul. 2024, 18:14

Nominee for FSC chairman maintains caution on crpyto accounts for corporations, loan-limit tightening

Kim Byoung-hwan, the nominee to head the Financial Services Commission, speaks at a parliamentary confirmation hearing held at the National Assembly on Monday. [YONHAP]

The nominee for chairman of the Financial Services Commission (FSC) struck a cautious note about the introduction of cryptocurrency ETFs and the widening adoption of the so-called stressed debt service ratio (DSR).

In a hearing held on Monday, Kim Byoung-hwan, a former vice finance minister, remained cautious about allowing corporations to hold bank accounts for transactions of cryptocurrencies in line with the stance of the outgoing chair, Kim Joo-hyun.

As for the planned tightening of loan limits, dubbed the second phase of the stressed DSR, he vowed to enforce the rule in a gradual and measured manner to ease the impact on households looking for mortgage loans.

The stricter loan limits have been postponed by two months to September.

The stressed DSR scheme was designed to lower loan limits by adding a hypothetical spread when calculating these limits in consideration of potential future rate hikes.

The government decided to gradually raise the stressed DSR in three phases — 25 percent of the set rate under the first phase, 50 percent under the second phase and 100 percent under the third phase — to minimize the market impact this year, the first year of its implementation.

The nominee went on to touch upon the issue of allowing corporations to hold bank accounts for crypto trading and bitcoin-based ETFs but made it clear that investor protection outweighs the need for deregulation.

"Taking into consideration the chaos we have experienced in the virtual asset market in the past, the current policy should prioritize investor protection," Kim told lawmakers.

He said there should be consideration about "whether the permission for corporations or institutions would be appropriate."

Addressing a question about bitcoin ETFs, Kim also replied that financial authorities "need to look at financial market stability and the impact on financial institutions."

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]