According to the South Korean central bank, as of December 2017, the balance of virtual currency accounts of Korean domestic banks totaled 1.79 billion U.S. dollars, according to South Korea’s Yonhap News Agency on July 5.
The Bank of Korea’s report believes that the figure of 1.79 billion US dollars (2 trillion won) is relatively low, because this is equivalent to about 8% of the total deposits of Korean brokerages, reportedly worth 26 trillion won ($23.27 billion). Therefore, the report suggests that the encryption market will not pose a threat to traditional local financial markets:
“Compared with other stock markets, the size of crypto-investment investment is not large, and local financial institutions have little exposure to the risks that digital assets may have.” In this context, we expect crypto assets to be used in Korean finance. The impact of the market is limited.
It is worth noting that the Bank of Korea’s data set covers the peak of the unprecedented growth of the cryptocurrency market at the end of 2017, when Bitcoin (BTC) prices reached $20,000.
The Bank of Korea has concluded that cryptocurrencies pose relatively limited risks to the traditional financial industry. In the same week, the Korea Financial Services Commission (FSC) disclosed that it “does not object to” cryptocurrencies and plans to be consistent with the G20 “unification” and the vision of cross-border encryption regulation.
In March of this year, the Group of 20 (G20) summit proposed a deadline for drafting cryptocurrency regulatory recommendations in July, calling on “international standards bodies (SSBs)” to evaluate the necessary “multilateral responses” and then “global implementation”.
South Korea reaffirmed the G20’s multilateral vision for the future of encryption regulation, and it can now be said to be a critical moment in the domestic encryption field in Korea. Throughout the spring, the government has some important positive news, the most striking of which is that the government plans to cancel the comprehensive ban on domestic ICO.
Just last week, in a major legalization initiative, the three ministries of the Korean government announced a draft of the new blockchain industry classification criteria, the first of which explicitly recognized the crypto exchange as a regulated financial institution.