Bank of Korea recognizes the value of stablecoins

• The Bank of Korea (BOK) said in a study issued Sunday that it does not reject the function of stablecoins in terms of their utility in monetary transactions. Stablecoins are a form of cryptocurrency linked to a stable asset, such as the US dollar, whose value does not fluctuate dramatically
• Despite its general unfavorable attitude toward cryptocurrencies, the bank’s evaluation of stablecoins makes sense
• The research stated that due to continuing efforts by financial institutions and governments for digitally oriented economies, the usefulness of decentralized finance (DeFi) will be enhanced

The Bank of Korea (BOK) said in a study issued Sunday that it does not reject the function of stablecoins in terms of their utility in monetary transactions. Stablecoins are a form of cryptocurrency linked to a stable asset, such as the US dollar, whose value does not fluctuate dramatically. Because many cryptocurrency exchanges currently lack direct access to traditional banks, these sorts of crypto-assets were first utilized to acquire other cryptocurrencies, including bitcoin. 

There’s a high chance for stablecoins to be used and to be efficient when it comes to money transfers between countries, payments in the virtual world, and the creation of an ecosystem that will be operational with cryptocurrencies as the base, BOK said. Stablecoins may continue to attract interest as a method of investment and speculative trading.

Despite its general unfavorable attitude toward cryptocurrencies, the bank’s evaluation of stablecoins makes sense. Unlike the bulk of today’s high-volatility cryptocurrencies, the majority of stablecoins utilize the dollar as their benchmark asset. However, many of them are linked to other major currencies like the euro and the Yen. 

Despite external causes, they have little price volatility, but even high-profile cryptocurrencies are subject to ups and downs. However, the BOK stated that the use of cryptocurrencies will be restricted, citing media reports that questioned the legitimacy of private cryptocurrencies as genuine currencies. 

The research stated that due to continuing efforts by financial institutions and governments for digitally oriented economies, the usefulness of decentralized finance (DeFi) will be enhanced. According to researchers and officials, DeFi refers to financial services that operate solely on blockchain networks with strong security and verifiability rather than through middlemen such as banks. Stablecoins may also be used within the blockchain architecture, which makes them appealing to the BOK. 

According to a study issued Sunday by the Bank of Korea (BOK), the country’s central bank did not deny the function of stablecoins in terms of their availability in monetary transactions. Stablecoins are a form of cryptocurrency linked to a stable asset, such as the US dollar, whose value does not fluctuate dramatically. However, the BOK stated that the use of cryptocurrencies will be restricted, citing media reports that questioned the legitimacy of private cryptocurrencies as genuine currencies.

Ritika Sharma

With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.