Lee Ju-yeol, the Bank of Korea Governor, stated that cryptocurrency carries forth several limitations as a means of payment. The BOK head aired his views in a recently televised policy committee meeting. According to the Governor, cryptocurrency assets do not harbor any intrinsic value. Mr. Ju-yeol acknowledged that the U.S Federal Reserve chair Jerome Powell also supports his statement on cryptos shortcomings as a settlement means.
Additionally, the Governor attributed his reason to the price volatility characteristic that cryptocurrencies hold. He said,
“It is very difficult to predict the price, but its price will be extremely volatile.”
The Weight of Adoption
South Korean financial regulators had previously announced that they would impose a 20% tax on crypto earnings exceeding $2.5M from the financial year 2023. The country is one of the few regions where there has been a red-hot crypto-asset movement. Back in 2018, crypto analysts claimed that the regions cryptocurrency activity had made the country able to affect the market price of BTC.
According to a Korean business blog, residents as old as 40 to 50 years old make cryptocurrency purchases. The blog also noted that older people were more successful in the virtual currency business than the ‘20s to 30’s age group. One Korean woman said she bought cryptocurrency after seeing business people like Elon Musk dipping hands into their pockets to make purchases.
Nevertheless, the BOK Governor said that multi-institutional investments in the asset are fueling the ongoing BTC bullish run. Moreover, Mr. Ju-yeol claimed that Teslas acquisition of the crypto world-beater is a significant reason why investors are excited to add BTC to their portfolio.
Nonetheless, South Korean financial watchdogs are planning to include taxes into the previously untaxed crypto-financial landscape. The taxation will cover profits and virtual assets received as gifts or inheritance subject to daily average pricing between the month before and after the giveaway was received.
Steps into the Virtual Currency Space
The South Korean National Assembly recently passed very critical laws involving the use of crypto in the country. The legislations are to determine the framework of crypto purchases, including an Anti Money Laundering rule overseeing virtual currency businesses. The countrys financial regulator, Financial Services Commission(FSC), urged all virtual currency service providers to register with it and report any unusual crypto transactions.
Last year, FSC had exercised a crackdown on several individuals who had used the digital assets to avoid taxes. Nevertheless, the close watch from the financial regulators has not affected crypto adoption in the country as residents continue to gain interest and invest in the digital assets.