Korean Central Bank classified cryptocurrencies as commodities

On Monday, a parliamentary audit was conducted of the Bank of Korea, the Central Bank of the Republic of Korea, by the country's National Assembly. During the hearing, the head of the bank refused to classify cryptocurrencies, such as bitcoin and ether, as currencies and declared them to be commodities instead.

Central Bank Governor, Lee Ju-yeol, was asked if it was at all possible to view virtual money as a currency. In response, he stated, "It is difficult to look at the example of the International Settlement Banks (BIS) in terms of money.”

While discussing the Central Bank’s own digital asset, Lee states hat "the possibility that the Central Bank’s digital money will be issued in the near future is likely to become a means of payment specialized for interbank transactions or Central Bank transactions.”

Song Young-gil, a member of the National Assembly's Planning and Finance Committee, called out the Central Bank for its poor research on cryptocurrencies. He believes that the research was insufficient and could have been carried out more effectively. He further compared it to the similar research done by other central banks. Asiae News quoted him as saying, "there are more than 1,000 companies that can use bitcoin in Korea. However, the data provided [by BOK] shows insufficient numbers."

Song further asserted the significance of digital currencies in the financial sector, saying that "virtual currency and blockchains are important research subjects, if you neglect them, you can lose the future market."

Responding to the lawmaker’s criticism, the head of the bank admitted, "I fully agree with your point of view. We also refer to a lot of virtual currency research conducted in countries like Sweden." He further assured that, "the Bank of Korea will put more emphasis on virtual currency research."

In September, following China’s move, South Korea also banned corporations from participating in Initial Coin Offerings (ICOs), a popular fundraising tool for developing startups. There were some discussions among lawmakers concerning stricter regulations for cryptocurrency exchanges back in August. The Bank of Korea's stance on the need for such regulations was stated by the BOK Governor as, “regulation is appropriate [for cryptocurrencies] because it is regarded as a commodity. It is not a regulation at the level of money… It is not a situation for the Bank of Korea to take action at present."