- The Financial institution of Korea has mentioned that chapter incidents within the home cryptocurrency market are unlikely.
- The BOK highlights strict laws and the absence of ICOs as elements that scale back the probability.
- The report highlights the shortcomings of worth stabilization and unsustainable enterprise fashions.
In a current Crypto Asset Market Vulnerability and Penalties Report, the Financial institution of Korea (BOK) mentioned that accidents such because the chapter of buying and selling and lending platforms within the home crypto asset market are unlikely to happen within the nation.
The BOK famous that the native cryptocurrency asset ecosystem primarily consists of exchanges centered on easy commerce brokerage as a result of strict laws, together with the ban on Preliminary Coin Choices (ICOs). Due to this fact, it claims that the probability of experiencing occasions much like the incidents of the worldwide cryptocurrency market stays low.
However, the Korean apex financial institution emphasised the necessity to put together for potential dangers within the cryptocurrency market, advising warning and preparedness for unexpected circumstances.
The report documented world incidents such because the sudden collapse of the algorithmic stablecoin USD (UST), the native token LUNA, the chapter of the crypto-asset lending platform Celsius and the chapter of the crypto-asset alternate FTX.
As well as, the BOK cited failures of worth stabilization techniques, unsustainable enterprise fashions primarily based on steady capital injection, asset and debt maturities mismatch, liquidity administration problems, non-transparent insider transactions and diversion of buyer deposits because the causes of those incidents.
The report highlights that Korea’s present regulatory framework, which prohibits ICOs and requires the separation of buyer deposits and fairness, makes conditions like Celsius and FTX harder.
It ought to be famous that cash issued by native exchanges situated overseas can’t be listed on their very own exchanges. The BOK concluded that within the Korean context, it’s unlikely that it could be doable to assist self-issued cash much like FTX FTT and manipulate costs by means of associated entities corresponding to Alameda.
Though the dangers related to crypto-assets are low, the BOK suggested a complete response system to organize for potential threats.
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