According to a report from a popular media outlet in South Korea ,Yonhap, the amount of crypto related asset investments are relatively low, compared with South Korea’s other local financial institutions and equity markets. The exceptional amount of 2 trillion won (approximately 1.79 billion USD) in the domestic banks’ virtual currency accounts was considered to be relatively low as it only equated to around 8%of the total deposits operated under the South Korea’s brokerage houses which valued around 26 trillion won ( approximately 23.27 billion USD). The report further indicates that the risk of these newly emerging assets causing substantial impacts towards the traditional local financial markets are limited .
Crypto trading activities grew significantly
The crypto trading activities in South Korea grew significantly in the late 2017. Around 12% of global crypto trading volumes were contributed by South Korea when there was an observable massive price increase in digital coin, Citi estimated in December 2017. Citi analyst further suggested that the popularity of digital coins such as Bitcoin had started to drain retail liquidity away from some of the largest stocks.
The amount of crypto-asset investment is not really big, compared with other equity markets, and local financial institutions' exposure to possible risks of digital assets is insignificant. Against this backdrop, we expect crypto-assets to have a limited impact on the South Korean financial market.
The Bank of Korea’s statement on the insignificant risk of cryptocurrencies posed on the traditional financial sectors was published in the very same week that the Financial Services Commission (FSC) of Korea revealed its stance on cryptocurrencies, which is “not opposed” and plans to align and follow the G20 vision of transnational crypto regulations. Over the first two quarters of 2018, the government of South Korea implemented a series of regulations to quell the crypto craze in after it reaches an unprecedented pitch in early January. However, the government is now focused more on the classification and revision of cryptocurrencies and regulations regarding cryptocurrencies.
Bithumb and Upbit as Crypto Asset Broker
The Ministry of Strategy and Finance believes that Bithumb (Largest exchange in South Korea) and Upbit are likely to have their “virtual currency handler” title removed and to be officially classified as “crypto asset broker” which is a huge step forward for the blockchain industry to be managed as a legitimate industry. The G20’s vision of the digital coin regulations plays a pivotal role in shaping the future domestic crypto sphere. Some exhilarating news has forthcoming from the government, notably including the abolishment of the country’s blanket ban on the domestic Initial Coin Offerings.
New block chain industry classification standards
Just recently, a draft of new blockchain industry classification standards had been released by Korean government ministries in a major legitimizing move. This is a huge milestone in the crypto industry as the new classification standards notably acknowledge crypto exchange as a legitimate industry which operates under the recognition from the Korean government.