South Korea's central bank, the Bank of Korea (BOK), recently announced plans to leverage cryptocurrency and blockchain technology in its mission to transition the country into a fully cashless society. This initiative aligns with the nation's progressive stance on financial innovation and digital payments.
Key Initiatives by the Bank of Korea
"Coinless Society" Pilot Programs:
- Since 2017, South Korea has eliminated coin-based change in convenience stores, with plans to phase out coin minting entirely.
- Cryptocurrencies are now viewed as a catalyst to expedite this transition.
Blockchain and Cryptocurrency Research:
- The BOK published its 2017 Payment Settlement Report, highlighting collaborative studies with other central banks on blockchain's applicability in payment systems.
- A dedicated research team was formed in January to assess the impact of central bank digital currencies (CBDCs) and explore regulatory frameworks.
Global Tax Consensus:
- The G20 recently classified cryptocurrencies as assets rather than currency, influencing tax policies worldwide.
- South Korea is considering similar asset classification to avoid double taxation pitfalls.
Technological Advancements
- Distributed Ledger Technology (DLT): The BOK is testing DLT for interbank transfers, focusing on security and efficiency.
- International Collaboration: Active participation in Bank for International Settlements (BIS) forums to shape global digital currency standards.
Legislative Support
A recent blockchain industry forum hosted by South Korean lawmakers emphasized:
- Drafting foundational laws for blockchain adoption.
- Public-private partnerships to bolster local blockchain enterprises.
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FAQs
Q: How will South Korea's cashless society impact everyday transactions?
A: Expect faster, more secure digital payments with reduced reliance on physical currency.
Q: What role does the Bank of Korea play in cryptocurrency regulation?
A: The BOK researches CBDCs and advises on policies to balance innovation with financial stability.
Q: Why are cryptocurrencies classified as assets in South Korea?
A: To align with global standards and simplify tax compliance, avoiding complex VAT scenarios.