Commercial Banks in South Korea reportedly held almost $2 billion in crypto-currencies during the bull run of 2017 but, according to a recent Bank of Korea report, this was a small amount compared with other traditional investments and it presented no real threat to Korea’s existing financial markets.
Local media source Yonhap reported that virtual accounts held by local banks reached 2 trillion won (approximately $1.8 billion) as of December 2017, according to the Bank of Korea, and this equated to about 8% of the total deposits operated by the country’s brokerage houses.
The central bank report said “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 report was published in the same week that the country’s Financial Services Commission revealed it is “not opposed” to crypto-currencies and plans to follow the G20’s vision of transnational crypto regulations. Over the past six months the South Korean government has implemented a series of regulations and security measures to quell crypto fervor after it reached fever pitch in early January this year. Recently, however, it has been making efforts to revise the regulation and classification of crypto-currencies.
The Ministry of Strategy and Finance, which has been working on the new classification, believes “crypto-currency exchanges such as Bithumb and Upbit are expected to be officially classified as crypto asset brokers after the government’s current title of ‘virtual currency handler’ is removed … The blockchain industry will be managed as a formal industry, starting with the government’s industrial classification, and conducting surveys and statistics.”
South Korea’s largest exchange, Bithumb, now handles $500 million in daily trade volume according to analytics website coinmarketcap.com. According to industry observers it is the only publicly listed exchange in the world and held more than $6 billion in crypto-currencies during the peak period of December-January.
Markets have been in decline ever since the start of the year and now the banks of South Korea hold more crypto assets than its largest exchanges and, unlike in other countries in the region, banks in South Korea are generally more enthusiastic about blockchain and the crypto industry.
The country’s second largest bank, Shinhan, for example, has been developing Bitcoin wallets for its clients and has also partnered with San Francisco blockchain firm Ripple to employ its blockchain products to facilitate faster and more cost effective cross-border transactions.
South Korea and also Japan, which have both become hubs of global crypto trading, can expect positive support from their central banks and governments for the foreseeable future.
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