The head of South Korea’s Financial Services Commission (FSC), Kim Byung-hwan, has dismissed the idea of creating a national Bitcoin reserve, stating it is not a priority at the moment. His comments came during a televised interview on November 24, as reported by Joongang Ilbo and News Prime.
Why a National Bitcoin Reserve Isn’t on the Agenda
Kim clarified that Seoul sees no immediate need to stockpile cryptocurrencies, contrasting with US President-elect Donald Trump’s promise to do so. He explained, “We aren’t anywhere near a move to [build a Bitcoin reserve] at the moment.”
The FSC’s approach involves observing how other countries adapt to the United States’ pro-crypto policies before deciding South Korea’s stance. Kim emphasized, “The level to which we will foster [the crypto industry] will ultimately depend on how other nations’ stances evolve due to US government policy.”
Protecting Investors Takes Priority
The FSC chief also highlighted that domestic factors play a crucial role in shaping regulatory decisions. Kim stated, “Our priority is working out how best to further protect [domestic crypto] investors. Holding [Bitcoin] as a reserve asset is an issue that requires careful consideration.”
Doubts About Crypto’s Economic Benefits
Kim questioned whether Bitcoin and other cryptocurrencies could positively impact South Korea’s economy. He noted that while stock market investments create a “virtuous circle” for economic growth, the benefits of cryptoassets remain unclear.
Kim remarked, “We need to investigate the crypto market, which has outpaced the stock market in trading volumes, to determine its potential impact on the economy.”
Monitoring Market Volatility
Acknowledging the rapid rise in cryptocurrency prices, Kim warned of the market’s volatility and the risks of unfair trading. The FSC intends to closely monitor the market for any signs of manipulation.
“Cryptoasset prices are rising rapidly in a short period, and the market itself is highly volatile,” Kim noted. The regulator aims to strike a balance between fostering the industry and safeguarding investors.
Shifting Views on Crypto Regulation
Kim admitted that the FSC once viewed cryptocurrency as too risky for mainstream adoption. However, with the introduction of the Virtual Asset Protection Act earlier this year, the regulator is reconsidering its approach.
He explained, “Our priority is to find ways to connect this market to the existing financial system while managing its risks.”
Tensions Between Regulators and Lawmakers
The FSC’s cautious stance on crypto contrasts with more progressive proposals from South Korean lawmakers. While some politicians advocate allowing companies to hold crypto on their balance sheets or approve Bitcoin spot ETFs, the FSC advises restraint.
Kim concluded that the government must carefully monitor market activities to prevent unfair trading and ensure stability in the rapidly evolving crypto landscape
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