South Korean deputy PM says continued crypto volatility is a major concern

South Korean Deputy Prime Minister, Hong Ham-ki, recently spoke about the cryptocurrency industry, with a particular focus on the CBDCs, noting that a central bank digital currency could act as a cryptocurrency if implemented. However, he also had strong concerns regarding the volatility of crypto.

He believes that it is natural for cryptocurrency taxation to exist, as, according to the principles of taxation equity — “it is only natural to tax where there is income.” However, he pointed out that this is something that needs to be decided at the national assembly after in-depth deliberation.

He also mentioned that there are currently plenty of global discussions regarding virtual assets, which is only natural, given how big of a role they are currently playing. He noted that South Korea is no different. However, he also noted that many of the on-going discussions involve illegal transactions that are happening in this space, like hacking and money-laundering.

Essentially, he sees the lack of transparency as one of the biggest issues, which is why a year and a half ago, the government started focusing on addressing these illegal assets and increasing transparency. The responsibility for ending illegal transactions and increasing transparency fell on crypto exchanges.

Cryptos might never be currencies due to their volatility

Another significant issue, as mentioned, is price volatility. Big volatility and risks are something that each individual investor has to bear separately. As for the government, the focus is on stopping the illegalities within the industry.

When asked about the future role of Bitcoin (BTC/USD), particularly due to El Salvador’s recently announced move to make Bitcoin legal tender, he pointed out that BTC price got cut in half over the last few months. This makes volatility such a big of an issue, that he worries whether cryptocurrencies will ever be able to act as actual currencies.

On the positive side, he believes that it is natural for cryptos to have economic transaction values, given that they are, in fact, virtual assets. However, he did not completely exclude cryptos from being currencies. He merely pointed out that the world still has to wait and see if cryptos can play the role of currencies, which will likely depend on whether or not their prices will stabilize in years to come.

CBDCs could be one volatility-resistant solution, which is why the Bank of Korea has been reviewing a CBDC of its own and is planning a pilot for later this year.