Korea's FSC chief says rejection of startup Rusenteubeullok's licence bid was fair
In short
Financial Services Commission chairman Lee Eok-won (이억원) told a National Assembly audit on 8 October that the process that left fractional-investment startup Rusenteubeullok (루센트블록) without a preliminary licence for an over-the-counter exchange was fair. Democratic Party lawmaker Min Byung-duk (민병덕) said the two approved operators had no fractional-investment track record and are headed by former regulators; Lee said he sympathised with the frustration of innovative businesses but that procedures had to be followed.
Read the full story 2 min read
Financial Services Commission (FSC) chairman Lee Eok-won (이억원) said on 8 October that the procedure under which fractional-investment startup Rusenteubeullok (루센트블록) was refused a preliminary licence for an over-the-counter exchange was fair. He was answering questions at the National Policy Committee's audit of the FSC at the National Assembly in Yeouido, Seoul, Newsis and Asia Economy reported. [ 3 , 4 , 6 ]
Democratic Party lawmaker Min Byung-duk (민병덕) said Rusenteubeullok had run a sandbox service for 500,000 people over four years without a single incident, while the licences went to institutions with no operating experience. He said both approved operators had a fractional-investment record of zero and that their heads were a former Financial Supervisory Service governor and a former senior FSC official. According to Asia Economy, he also said KDX had applied as a business-to-business operator although the FSC described the business as consumer-facing. [ 3 , 4 , 6 ]
Lee said the licensing method had been announced after consulting the industry, and confirmed that capping licences at two was a policy decision announced in advance. He said he sympathised with the frustration of innovative businesses but that the FSC had to follow procedures. Asked whether an innovative finance review committee had been convened for Rusenteubeullok, he said it had not because it was not mandatory, Asia Economy reported. [ 3 , 4 ]
Rusenteubeullok, founded in 2018, was designated an innovative financial service in 2021 and launched the property fractional-investment platform Soyu (소유) the following year. It failed in the February preliminary licensing round. Outlets differ on the winners: Chosun Ilbo names KRX and NXT, Korea Economic Daily names the NXT consortium and KDX, and Newsis describes consortia centred on Korea Exchange and Nextrade. The FSC has said sandbox participation does not guarantee a licence and that incumbents received bonus points for their experience, Korea Economic Daily reported. [ 1 , 2 , 3 , 5 ]
On 7 October, SMEs and Startups Minister Lee So-young (이소영) told a separate audit that a company being left out when the business is formally launched, after years in the regulatory sandbox, undermines the system's effectiveness. Democratic Party lawmaker Lee Un-ju (이언주) asked for improvements to be discussed with the FSC and reported by the comprehensive audit on the 23rd. Rusenteubeullok CEO Heo Se-young (허세영) was due to appear as a witness at the FSC audit. [ 1 , 2 ]
Why it matters
Business outlets frame the case as a test of whether firms that build markets under Korea's financial regulatory sandbox can survive once those markets are formally licensed. The startup's future depends on the commission reconsidering, which it has so far declined to do, while a minister and lawmakers have called for changes to the sandbox system.
Key facts
- FSC chairman Lee Eok-won said at the 8 October National Policy Committee audit that the licensing procedure was fair. [ 3 , 4 , 6 ]
- Lee said he sympathised with innovative businesses' frustration but that the FSC had to follow procedures. [ 3 , 4 ]
- Rusenteubeullok failed in February to win a preliminary licence for a fractional-investment (STO) over-the-counter exchange; two other applicants were approved. [ 1 , 2 , 3 ]
- Lee said the cap of at most two licensed operators was a policy decision announced in advance, not a legal limit. [ 3 ]
- Min Byung-duk said both approved operators had no fractional-investment operating record and are headed by a former Financial Supervisory Service governor and a former senior FSC official. [ 3 , 4 ]
- Rusenteubeullok, founded in 2018, has about 500,000 users; Chosun Ilbo reported it has completed 30 billion won in cumulative offerings. [ 1 , 2 , 3 , 5 ]
- Lee said an innovative finance review committee was not convened for Rusenteubeullok because it is not mandatory. [ 4 ]
- SMEs and Startups Minister Lee So-young (이소영) said on 7 October that the sandbox system appears to need improvement. [ 2 ]
Confirmed by several sources
- Lee Eok-won said at the 8 October audit that the licensing procedure was fair. [ 3 , 4 , 6 ]
- Lee said he sympathised with the frustration felt by innovative businesses. [ 3 , 4 ]
- Rusenteubeullok was rejected for a preliminary licence for a fractional-investment over-the-counter exchange in February. [ 1 , 2 , 3 ]
- Min Byung-duk raised the fairness of the licensing and alleged the approved operators lacked any fractional-investment operating record. [ 3 , 4 , 6 ]
- The FSC limited licensed operators to at most two. [ 2 , 3 ]
- Rusenteubeullok has about 500,000 users or customers. [ 1 , 2 , 3 ]
Still unclear
- Which entities received the preliminary licences. Chosun Ilbo names KRX (Korea Exchange) and NXT (Nextrade); Korea Economic Daily and Asia Economy name KDX and NXT; Newsis describes two consortia centred on Korea Exchange and Nextrade.
- Whether the approved operators benefited from favouritism toward former officials. This is an allegation by lawmaker Min Byung-duk; the FSC chairman said the procedure was fair.
- What Rusenteubeullok CEO Heo Se-young (허세영) said as a witness at the audit. Documents said he was due to appear on 8 October but none report his testimony.
- Whether the FSC will reconsider or allow an additional licence. The chairman said procedures must be followed; no decision is reported.
What local media are saying
Timeline, local time
- 7 October: Chosun Ilbo reports that Rusenteubeullok's licence rejection will be raised at the FSC audit. [ 1 ]
- 8 October: Korea Economic Daily reports the SMEs minister's 7 October remarks on the sandbox system. [ 2 ]
- 8 October: Newsis reports FSC chairman Lee Eok-won saying the licensing procedure was fair. [ 3 ]
- 8 October: Chosun Ilbo reports Lee's reply to Min Byung-duk's criticism. [ 6 ]