South Korean Advocates for Institutionalization of Cryptocurrencies via Bitcoin Derivatives
A South Korean commission dubbed the 4th Industrial Revolution Commission has proposed that the government ought to permit financial institutions to establish cryptocurrency-based products, such as Bitcoin derivatives as they will be instrumental in the long-term institutionalization of cryptocurrencies.
A South Korean commission dubbed the Fourth Industrial Revolution Commission has proposed that the government ought to permit financial institutions to establish cryptocurrency-based products, such as Bitcoin derivatives.
As reported by Business Korea on Jan. 6, the presence of Bitcoin derivatives will be instrumental in the long-term institutionalization of cryptocurrencies.
The Growth of Digital Finance
Digital finance has emerged to be a critical area for both the blockchain and financial sectors. As a result, the commission has asked the Korean government to follow the footsteps of the US financial authorities by permitting financial companies to release future products on the foundation of Bitcoin prices.
To avoid reliance on foreign custodians in the crypto assets’ process handling, the commission advocated for the development and introduction of a Korean custody solution in the financial industry.
It was also suggested that Bitcoin ought to be listed directly on Korea Exchange (KRX), the nation’s sole securities operator.
The Korean government was also advised to think about initiating cryptocurrency exchange guidelines or business licenses, as well as incorporating crypto-linked products into the financial network.
The commission noted: “As of May 2019, daily crypto-asset trade hit more than 80 trillion won (over $68 billion) in the world, so it is no longer possible to stop crypto-asset trade. [...] The Korean government has to gradually allow institutional investors to deal with crypto assets and promote over the counter (OTC) desks dedicated to institutional investors’ trade.”
The development of Korean custody technology was also encouraged.
The commission stated: “Participants in the traditional capital market such as securities firms and banks should develop and introduce domestic custody solutions to handle crypto assets so that the Korean crypto-asset custody market will not depend on foreign countries.”
The Fourth Industrial Revolution Commission was incorporated through a presidential decree in 2017, and it is mandated with the coordination of policy recommendations and initiatives about the development of technological innovations and sciences in South Korea.
Image via Shutterstock
Image source: Shutterstock
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