Key Points
- The South Korean Financial Services Commission remains wary of digital assets despite increasing domestic demand for a Bitcoin reserve.
- The Chairman of the Financial Services Commission, Kim Byung-hwan, states that more capital needs to be invested in the stock market rather than the crypto market.
South Korea’s Financial Services Commission (FSC) continues to exercise caution regarding digital assets. This comes amidst growing local appeals for the establishment of a Bitcoin (BTC) reserve, following the U.S’s increasingly positive approach towards cryptocurrencies.
A report from the South Korean news platform Newsprime reveals that the FSC’s Chairman, Kim Byung-hwan, has responded to the escalating demands for South Korea to begin creating a Bitcoin reserve to safeguard the liquidity of digital assets.
Kim Byung-hwan’s Stand
In a recent interview, Kim stated, “[A national Bitcoin reserve] it’s a bit of a distant story at the moment.” He recognized that the U.S President-elect Donald Trump has shown a much more favorable attitude towards crypto compared to the previous administration, which Kim perceives as conservative.
Despite this, Kim admitted that the South Korean FSC would require time to closely watch the digital asset trading sector and observe the actions of other countries in potentially following America’s lead in embracing crypto.
“We will have to see what the U.S. does, but it is a bit far-fetched at the moment. For now, the priority is how to connect this market to the existing financial system and establish a relationship with it,” Kim added.
More Funds Needed in Stock Market
Kim also emphasized the need for more investment in the stock market rather than the crypto market. He noted a recent surge in virtual assets trading volume, which has even surpassed that of South Korea’s local stock market indexes KOSPI and KOSDAQ.
“As [virtual asset] prices are rising rapidly in a short period of time and the market itself is highly volatile, it is necessary to closely monitor the unfair trading sector with a focus on it,” Kim stated.
South Korean regulators have been taking steps towards securing the crypto market. Most recently, the Democratic Party of Korea announced plans to introduce a 20% cryptocurrency taxation starting in Jan. 2025. This law would impose a 20% tax with an additional 2% local tax on profits earned from crypto trading that exceeds 50 million Korean won or around $35,668.
Initially, regulators suggested the 20% tax would apply to profits over 2.5 million won or approximately $1,800. However, several major crypto exchanges argued that imposing a 20% tax on the basic deduction of 2.5 million won would significantly reduce trading volumes.
