South Korean Regulator Probes Crypto Staking Services: Could New Regulations Follow?

• South Korean financial regulator, the Financial Supervisory Service (FSS), is probing domestic crypto staking services.
• The FSS has requested cooperation from some of the nation’s top exchanges for data related to their staking operations.
• The probe follows a similar investigation launched by US regulators into possible securities violations in regards to staking services.

South Korean Regulator Probing Crypto Staking Services

A top South Korean financial regulator has launched a probe into domestic crypto staking services. At least three of the nation’s four biggest exchanges – Upbit, Bithumb, Korbit, and Coinone – confirmed that they had been contacted by the FSS recently regarding staking.

US Regulations Sparked Seoul Response

Earlier this month, United States regulators launched a legal case against staking providers. The exchange Kraken was probed over possible securities violations, and Coinbase CEO Brian Armstrong claimed the Securities and Exchange Commission (SEC) was attempting to „get rid of crypto staking in the US.“ This news drew a reaction in Seoul and caused the FSS to make inquiries on the matter.

Regulators Investigating Potential ‘Securities’ Violations

Domestic exchanges have claimed that they do not use customer funds to pay out staking earnings – and that exchanges‘ own tokens are kept separately from those belonging to customers. But regulators appear to be keen to resolve whether or not stacking services can be legally construed as a form of „securities“ trading. Further developments from the United States in regard to whether some cryptoassets can be viewed as securities could influence legal battles in South Korea.

Positive Reaction From Prosecutors Over SEC Move

South Korea prosecutors said this week that they viewed the SEC’s recent filing against Terraform Labs and its CEO Do Kwon as a „positive development“. The SEC has accused Kwon and company executives of „securities“ violations, which has led many observers to believe that further regulations regarding cryptocurrencies may be incoming soon.

FSS Considering New Regulations?

The FSS did not comment on whether or not new regulations would be forthcoming with regards to crypto staking services. However, an unnamed official at one of the exchanges stated that an outright ban on domestic staking was currently not being considered by regulators at this time.