South Korea’s central bank, the Bank of Korea (BOK), has issued a surprisingly crypto-friendly report about the role crypto may play in the economy of the nation going forward – and questioning whether bitcoin (BTC) and altcoins could “replace legal currencies” in the years to come.
There were also some possible words of encouragement for stablecoin developers and decentralized finance (DeFi) advocates.
The BOK published a report on August 8 entitled “The possibility of a paradigm shift in the financial sector brought about by digital innovation” (literal translation). In the paper, the BOK’s researchers forecasted that cryptoassets would continue to be of interest to the private sector in the future, where it would operate as an “investment and speculative” vehicle, and concluded that BTC and the like would probably not completely do away with fiat in the future, mainly due to volatility concerns.
The authors noted that crypto would continue to experience increased “limited-purpose” adoption in the private sector, though, where its functionality would develop separately from fiat currency.
Per SBS and the Segye Ilbo, the BOK report authors wrote,
“The concern is whether or not private cryptographic assets such as bitcoin can replace the role of legal currency in the future.”
Using a familiar argument, they argued that digital assets could become a form of “digital gold,” and win commonplace acceptance in the role of a hedge against inflation.
On the role of stablecoins, the authors wrote:
“Among cryptoassets, stablecoins, which are designed to maintain a stable value by pegging to fiat currency will have a high potential for use in cryptoasset ecosystems and virtual worlds as well as cross-border remittance scenarios.”
The report is not a policy document, but does represent the views of at least some of the BOK’s staff.
The authors also made mention of the growing interest in DeFi, an industry sector they also claim to be on the up, writing that while conventional financial companies will continue to be most people’s go-to resource for “general transactions,” the role of DeFi, which is more specialized “can continue to grow.”