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The financial industry was surprised when the concept of distributed ledgers was introduced, says FSS director

“People from the financial industries were surprised when the concept of a distributed ledger was introduced,” said Kim Yong-tae, who heads the fintech innovation department at the Financial Supervisory Service (FSS). “It’s because it has been a standard where obviously ledgers were handled by the central institution. Personally I’m curious as to the future of virtual assets,” Kim said at a joint seminar by the National Assembly and the Korea Blockchain Mediation Association (KBMA) on blockchain and financial policies on Oct. 6. # Bitcoin prices have been on the rise….Korea’s influence, however, has shrunk FSS director Kim, ahead of explaining the government regulations regarding virtual assets, addressed recent bitcoin trends. “Bitcoin, which has seen its value drop after peaking in 2017, has been rising since 2020,” Kim said. “The total market capitalization of virtual assets is estimated at $348.5 billion and daily transactions amounts to roughly $112.7 billion. “Overall, it is showing an upward trend.” However, Kim noted that daily transactions of virtual assets at the four leading exchanges in Korea — Bithumb, Upbit, Coinone and Korbit — are roughly $470 million, which isn’t much compared to daily global exchanges. “Korean exchanges’ influence compared to 2017 has relatively shrunk,” Kim said. # The key points are DeFi, allowing exchanges to conduct bank businesses, permitting custody, Libra 2.0 and China’s DECP The FSS director pointed out five key points that the virtual asset market considers important — DeFi, allowing banking businesses, approving custody, Libra 2.0 and China’s DCEP. On DeFi, Kim said there have been warnings raised against bubbles. “However, the market overall seems to be heading toward DeFi” Kim said. On allowing exchanges to conduct banking services as well as custody, Kim said that while the U.S. has not fundamentally changed its position on the issue, it seems the U.S. is open to allowing consignment services or services that are related to supporting virtual assets. He also pointed out the virtual asset project Libra 2.0 led by Facebook, which recently changed its direction toward a regulation-friendly system, and the Chinese government led digital currency DCEP. “When looking at the thigs happening in the virtual assets market recently, it feels as though it has already surpassed the realm of simple technology,” Kim said. “While the technical barrier has been lowered significantly, the realm of marketing [such as designing incentive structures as well as governance] has expanded. This is the biggest difference from the past.” # “Curious as to what the future of virtual assets will be” At the end of his presentation Kim said many in the financial industry were surprised at the concept of distributed ledgers. “There is certainly a strong point in distributed ledgers as a new means of credibility,” Kim said. "However, the existing financial community has no option but to continuously ask questions over what kind of specific values are derived from distributed ledgers.” He added that while current financial services have close-knit regulations. Virtual assets are structured in a way that it moves far away from regulations on its own once the technicians create the technology. Kim also noted that virtual assets being outside of fiat currency is a variable. “While the technology is far ahead, the social system of the world is far behind,” Kim said. “Under such circumstances, I’m personally curious as to the future of virtual assets.”

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