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In South Korea, there has recently been a large increase in crypto-investments. Unlike in the United States, regulatory authorities in South Korea initially refrained from engaging in the digital asset ecosystem. However, the case is no longer the same at the time.
Lee Ju-yeol, Governor of the Bank of Korea (BOK), is in the news today after saying that cryptocurrencies have certain drawbacks as a mode of payment. During a news conference after a recent Monetary Policy Committee meeting, Lee said,
“The BOK’s stance on cryptocurrency hasn’t changed from the previous position that crypto assets have no intrinsic value.”
The governor emphasised the “volatile” value of crypto-assets and stated that determining an acceptable price is extremely difficult.
The executive also spoke about the country’s CBDC proposals. He said that, while the issuance of CBDCs in South Korea would take time, he would not make a definitive comment about the possible effects on markets.
In reality, Lee quoted a recent speech by United States Federal Reserve Chairman Jerome Powell. Powell recently emphasised his stance on cryptocurrency, which is somewhat similar to that of his predecessor. He said,
“They’re really vehicles for speculation. They’re not really being actively used as payments.”
Former Fed Chairman and current US Treasury Secretary Yellen has previously said that she considers Bitcoin to be a “highly speculative asset,” as well as a rather “inefficient” method of performing transactions.
South Korea’s Ministry of Economy and Finance intends to levy a 20% tax on cryptocurrency gains beginning January 1, 2022. The statement also stated that earnings in excess of 2.5 million won will be taxed. And cryptocurrency exchanges have been limited by the most recent regulatory shift.
The official’s statement is fascinating to read, particularly in light of a recent growth. The use of crypto-assets to buy products and services was prohibited by Turkey’s central bank on Friday. It cited the irreparable possible losses and risk inherent in such deals as justification.
The official gazette said,
“Payment and electronic money institutions will not be able to intermediate the platforms that offer trading, custody, transfer or issuance services for crypto assets or fund transfers from these platforms.”