Financial Supervisory Service Governor Lee Chan-jin (이찬진) met CEOs of major digital asset businesses and urged them to strengthen firmwide internal controls. He said user protection and market surveillance functions should be enhanced to restore market trust and help the industry move into the institutional sphere.

The Financial Supervisory Service said on Wednesday that Lee held a meeting with the CEOs of 15 major digital asset businesses to discuss steps to strengthen internal controls, protect users and improve market surveillance functions.

Lee said the digital asset market had been somewhat sluggish in the first half of this year due to money moves and erroneous Bitcoin payments. Still, he said the market base was expanding, helped by various attempts using stablecoins, financial convergence based on blockchain technology and efforts to refine the system for asset tokenisation.

Lee stressed that the foundation of market trust lies in control systems that operate routinely within companies, rather than in public regulation or ex post punishment.

He said, "For sustainable development and substantial growth, please pay special attention and make efforts to build and operate a firmwide internal control system."

He also urged companies to respond to institutional changes. With the enactment of the Digital Asset Basic Act being pursued and related regulatory frameworks being refined, including amendments to the Act on Reporting and Using Specified Financial Transaction Information and the Foreign Exchange Transactions Act, companies need to closely check the status of legal revisions, he said.

Lee also urged exchanges to strengthen market surveillance capabilities. He said they should respond proactively so that digital asset exchanges can faithfully perform their roles in preventing and detecting unfair trading.

The watchdog also said it will strengthen market monitoring using artificial intelligence and advance its investigation system to eradicate unfair trading.

He also stressed responsible management that puts user protection first. Lee said companies should examine whether product suitability, the level of information provided and systems to prevent and remedy harm are reasonable before emphasising the principle of users' self-responsibility.

He said, "Launching high-risk products that pursue only short-term performance, provocative events, delayed disclosure of insufficient information, and shifting damage onto well-intentioned users are ultimately a path to losing users' trust."

Industry CEOs said they will not only comply with laws and regulations but also implement self-regulation related to trade support and advertising and promotion, and will overhaul and strengthen internal controls across their operations.

They added that gradual regulation is also needed, considering differences in business scale and staffing by operator and taking into account the number of users and the scope of business.

The industry also requested policy support, including improvements to related systems, to strengthen the global competitiveness of South Korea's digital asset industry and expand innovative services. Lee said the watchdog will also work to resolve tasks needed for the digital asset industry to move into the institutional sphere.