A senior researcher at the Korea Institute of Finance (KIF) has called on the central bank to issue digitized tokens of the fiat won as a cryptocurrency over a blockchain.
Lee Dae-ki, a senior researcher at the Korea Institute of Finance (KIF), has suggested that the Bank of Korea (BOK) should “seriously consider” issuing digital tokens of the fiat won on a blockchain. The researcher cites reduced costs, increased transparency and ease of payments for consumers as reasons to adopt cryptocurrencies that have the potential to become a “revolution in finance”, according to a Korea Times report.
"Technology based on blockchain, the distributed accounting database, will show great promise in enabling central banks to improve their defenses against cyber attacks and overall the way payments are conducted between institutions and consumers," Lee said in the report published on Sunday.
The researcher warned that the central bank is nowhere near creating and issuing digitized Korean won at a time when digital tokens have no legal recognition in the country.
Still, Lee said it’s possible the central bank to issue digital tokens on a blockchain, a move that would lead to a complete overhaul of the banking industry.
The researcher wrote:
his will overhaul the banking industry as banks will have to compete with digital currency systems by providing higher interest or additional services which will be beneficial to consumers.
Korea has emerged among the largest cryptocurrency trading markets in the world, a fact not lost on the government that is now taking a hardline stance toward cryptocurrencies. Korean authorities have already banned the issuance of digital tokens via ICOs, or initial coin offerings, a radical new form of fundraising powered by cryptocurrencies. Last week, Korea’s primary financial regulator and watchdog ruled out regulatory oversight into cryptocurrencies like bitcoin because they aren’t recognized as fiat currency equivalents by authorities. Despite the lack of recognition, the country’s National Tax Service is currently devising a framework to enforce capital gains taxes on cryptocurrency adopters.
“Regular currency or commodity regulating cryptocurrencies such as bitcoin are, in part, held back by the government's growing inability to officially name what it actually is,” Lee stated. “Some countries regard digital coins as commodity, while other places are treating them as regular money.”
The researcher's comments come within weeks of a Chinese counterpart publishing similar statements in urging China's central bank to issue its own digital currency "as soon as possible." Among the earliest-known efforts of a central bank researching cryptocurrencies, the People's Bank of China successfully completed an early digital currency trial on a blockchain a year ago.
Bank of Korea image from Shutterstock.