South Korea’s central bank issued an unexpectedly crypto-friendly report on the role that cryptocurrency will play in the nation’s economy in the near future. The Bank of Korea questioned whether bitcoin (BTC) and altcoins could replace legal currencies in the coming years. There were also some encouraging words for stablecoin developers and DeFi advocates.
The BOK published the report on 8th August, with BOK’s researchers forecasting that crypto assets would continue gaining the attention of the private sector in the near future. Crypto would operate like an “investment and speculative” vehicle. The BOK concluded that BTC and other cryptos would perhaps not entirely replace fiat in the future, especially due to volatility issues.
The authors also noted that cryptocurrency would continue experiencing increased limited-purpose acceptance in the private sector, although its functions would grow separately from traditional currencies.
According to SBS and the Segye Ilbo, the BOK report authors wrote that the worry is whether or not private crypto assets such as bitcoin will replace the functions of legal currency in the future.
They argued that these digital assets could be seen as a form of “digital gold” and get more acceptance as a hedge against inflation.
The authors also wrote that stablecoins, which are meant to maintain a steady value by pegging them to fiat currency, will have more potential in cryptoasset ecosystems, metaverses and virtual worlds, and cross-border remittance situations.
Although the report is not regarded as a policy document, it represents the views of some of BOK’s staff.
The BOK authors also mentioned the increasing interest in DeFi, a financial industry sector they also claimed to be rising. They wrote that while conventional financial institutions will continue to be the go-to resource for standard transactions, the role of decentralized finance will continue to grow.
