South Korea Drops National Bitcoin Reserve Idea
Date: 2024-11-25 Author: Oliver Abernathy Categories: IN WORLD
Kim Byung-hwan, the head of South Korea’s Financial Services Authority (FSC), said in a televised interview on November 24 that the country does not see a need to create a national Bitcoin reserve anytime soon.
Kim noted that South Korea would prefer to watch the actions of other countries, including the United States, before making a decision. He stressed, “The future development of the country’s cryptocurrency industry will depend on the changing positions of other countries, as well as the domestic situation.”
Kim said that the FSC’s priority remains protecting investors within the country, and that the issue of using Bitcoin as a reserve asset requires further study. “Our main goal is to develop mechanisms that will best protect investors. As for storing Bitcoin as a reserve, this is a topic that requires time and analysis,” he explained.
Doubts about the benefits of cryptocurrencies
The regulator also expressed doubts that Bitcoin or other crypto assets can have a positive impact on the country’s economy. “Investing in the stock market creates a positive economic cycle. However, we are not sure that crypto assets have the same potential. We are currently studying the cryptocurrency market, which is already overtaking the stock market in terms of trading volumes,” Kim noted.
Kim warned that cryptocurrency prices are growing rapidly in a short period of time, and the market itself remains highly volatile. “We are trying to find a balance between the development of this industry and the protection of investors' interests. Our task is to closely monitor the market and prevent attempts at unfair trading,” he emphasized.
Kim recalled that the regulator previously adhered to the position that it was undesirable to integrate cryptocurrencies into the financial system due to their danger. However, the situation changed with the adoption of the Virtual Asset Protection Act in July of this year.
“Previously, it was believed that Bitcoin was not worth developing due to its high volatility and suspicions of fraud. Now we are focused on how to connect the cryptocurrency market with the existing financial system,” the head of the FSC noted.
Despite the FSC’s cautious approach, many South Korean lawmakers are seeking to win over voters by proposing more progressive measures. Some lawmakers are in favor of allowing companies to include cryptocurrencies on their balance sheets, while the regulator advises caution.
In addition, the FSC is actively trying to persuade politicians not to rush to legalize Bitcoin ETFs. The head of the regulator emphasized that the government needs to closely monitor the market to prevent manipulation of token prices.
