Prairie Fire for a Bitcoin Reserve
The Financial Services Commission of South Korea has opted to delay plans to create a national Bitcoin reserve, amidst growing domestic clamor for its creation. Chairman Kim Byung-hwan discussed the matter in an interview with Newsprime on Nov. 24 where he called it “a bit of a distant story at the moment.”
These calls picked momentum after the crypto-friendly policies of President-elect Donald Trump in the United States. Proponents believe a Bitcoin reserve would safeguard digital asset liquidity in South Korea, thereby guaranteeing financial stability as the crypto markets become increasingly active.
U.S. Influence on South Korean Policies
Kim lauded America’s proactive approach to cryptocurrency under Trump, describing it as an “active nurturing policy.” But Kim made a point to express that South Korea needs to consider the country’s particular regulatory and financial environment.
“We will have to see what the U.S. does,” Kim said. “For now, the priority is how to connect this market to the existing financial system and establish a relationship with it.” His comments signal further caution from the FSC, which will be watching developments overseas rather than acting precipitously.
Crypto vs. Traditional Markets
Kim also raised concerns about the growing dominance of cryptocurrency trading volumes in South Korea, with virtual asset trading volume lately surpassing that of activity on the nation’s main stock market indices, KOSPI and KOSDAQ.
“Funds should flow into traditional markets to support economic stability”, said Kim, warning of risks that may arise from the high volatility of cryptocurrencies to individual investors and to the greater financial system.
Strengthening Crypto Regulations
South Korea is actively trying to curb market volatility and unfair trade practices, including most recently the Democratic Party of Korea announcing a 20% cryptocurrency tax to be imposed in January 2025.
This will be levied on profits above 50 million Korean won, or $35,668, per year. It had earlier proposed a threshold of 2.5 million won, about $1,800, before protests by major exchanges forced a revision. The revised tax plan reflects a balanced approach to fostering growth while ensuring market stability.
Future Steps for South Korea
As the global crypto landscape evolves, South Korea’s FSC remains cautious. While Bitcoin reserves are not part of immediate plans, the government is focused on integrating digital assets into its financial system and developing a robust regulatory framework. Balancing innovation with investor protection will be key as South Korea navigates its role in the global crypto economy.
