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South Korean politicians raise concerns about crypto brain drain

South Korean politicians are urging officials to stop joining crypto companies in order to receive bigger paychecks as exchanges battle to strengthen compliance departments.

According to the legislature, more and more financial regulators and police officers are leaving the public service for crypto groups in an effort to comply with new regulations.

According to Roh Woong-rae, a politician from the ruling party, a middle-level official on the Financial Services Commission, the country’s financial regulator, has resigned in recent weeks to join Bithumb, one of the country’s major crypto exchanges.

“It’s like giving fish to a cat,” said Roh, who is a member of Parliament’s Working and Environment Committee. “With regulations on crypto assets remaining weak, we see lax morals in some public officials, including financial regulators.”

Roh called the move “very inappropriate” as the Finance Commission is responsible for regulating the crypto exchange.

Under South Korean Public Service Ethics Law, senior retired government officials face restrictions on new private sector jobs that are relevant to their previous work. Roh has insisted that the current rules also include lower-ranking officials.

“Dozens of former officials including police officers, Financial Services Commission / Financial Supervisory Service officials, lawmakers’ advisors and prosecutors have joined crypto exchanges in recent years to negotiate with regulators,” said a cryptocurrency manager.

The recent wave of staff changes has intensified after the government only allowed the country’s four major crypto exchanges to continue their Korean won-based crypto trading, and dozen of small and medium-sized exchanges as part of a regulatory overhaul aimed at reducing the overcrowded crypto industry in the To clean up the country had wiped out.

Cryptocurrency companies are facing increasing regulatory scrutiny around the world as their trading volume grows. Binance.US, the American subsidiary of the world’s largest crypto exchange, hired its first Chief Risk Officer on Friday.

South Korea’s crypto trading is dominated by four major exchanges – Upbit, Bithumb, Korbit, and Coinone – which account for more than 90 percent of the country’s total trading volume.

“The big players offer attractive incentives for regulators to explore them in order to make future rule changes more favorable to them,” said Lee Chul-yi, head of Foblgate, a medium-sized exchange.

Following regulation earlier this year, the government recently eased its regulatory stance on crypto trading to please young voters ahead of the March presidential election.

The National Assembly passed a bill in November to postpone the planned taxation of capital gains from trading in cryptocurrencies by one year. The country now plans to impose a capital gains tax of 20 percent on annual profits of more than 2.5 million won ($ 2,116) from trading cryptocurrencies starting in 2023.

Source: Crypto News Austria

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