The South Korean FSC remains cautious of digital assets in the wake of domestic calls for a Bitcoin reserve after the U.S takes a bullish stance on crypto.
According to a news report from South Korean news outlet Newsprime, Chairman of the Financial Services Commission, Kim Byung-hwan responds to rising demands for South Korea to start building a Bitcoin(BTC) reserve to secure the liquidity of digital assets.
“[A national Bitcoin reserve] it’s a bit of a distant story at the moment,” said Kim in an interview on Nov. 24.
He acknowledged that U.S President-elect Donald Trump has adopted a much more friendly stance towards crypto compared to the previous administration that Kim views as conservative, in a strategy Kim describes as an “active nurturing policy.”
Though that may be the case, he admitted that the South Korean FSC would need time to closely monitor the digital asset trading sector and observe what other countries choose to do in regards to following in America’s footsteps towards embracing crypto.
“We will have to see what the U.S. does, but it is a bit far-fetched at the moment. For now, the priority is how to connect this market to the existing financial system and establish a relationship with it,” said Kim.
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Furthermore, he stated more money needs to flow into the stock market instead of the crypto market. Recently, Kim noted there has been an influx in virtual assets trading volume, even surpassing that of South Korea’s local stock market indexes KOSPI and KOSDAQ respectively.
“As [virtual asset] prices are rising rapidly in a short period of time and the market itself is highly volatile, it is necessary to closely monitor the unfair trading sector with a focus on it,” said Kim.
South Korean regulators have been making moves towards securing the crypto market. Most recently on Nov. 20, the Democratic Party of Korea announced plans to introduce a 20% cryptocurrency taxation starting in Jan. 2025.
The law would implement a 20% tax with an extra 2% local tax towards profits earned from crypto trading that amounts to more than 50 million Korean won or equal to $35,668.
Initially, regulators proposed the 20% tax would apply to profits exceeding 2.5 million won or around $1,800. However, several major crypto exchanges argued that imposing a 20% tax on the basic deduction of 2.5 million won would make trading volumes plummet.
Read more: South Korea to Push 20% Crypto Tax in 2025 with $35K Exemption
