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Crypto investment does not pose risk to financial market

Crypto Investment Does Not Pose Risk to Financial Market

By Stefan Filipović
Published 4 months ago

There has been a flood of speculations about possible disruption of the financial market by cryptocurrencies. Consequences of these talks were that governments took a conservative approach to cryptocurrency regulations. This government stance had a negative impact on the public image of cryptocurrencies. People became extremely careful when dealing with them, which certainly had a negative impact on the technology development. A lot of analysts, so-called expert and others were the main driving force behind the crypto public image. This may not be a good thing because facts are what matters and facts are showing that cryptocurrencies are not nearly as dangerous as the public perceive them.

The latest results are coming from South Korea where it has been shown that investment in cryptocurrencies poses an insignificant risk to the local financial market.

 

South Korean Banks’ Investment in Crypto-Assets Remains Low

 

As Yonhap News Agency reports, Korean Central Bank has stated that banks' investment in crypto-assets remains low. As of December last year, the total amount of virtual accounts in local banks reached 2 trillion won or $1.79 billion. Total deposits of South Korean brokerage houses are worth 26 trillion won, so investment in crypto-assets is representing 8% of the total amount. Bank of Korea (BOK) report has stated that the local financial institutions' vulnerability to possible risks of digital assets is not significant. Also, the amount of crypto-assets investment is rather small compared with the other equity markets. Because of all of this, BOK expects that crypto-assets have a limited impact on the South Korean financial market.

 

Last year’s rise of cryptocurrencies caused new laws and regulations to be proposed and eventually implemented. South Korea was one of the countries that did really hard work in order for them to become a crypto haven, which TheTokener already reported. The government implemented a series of measures like a ban on investment by minors and a real name account system, all of this in order to make a market more transparent and controllable. This dedicated government stance towards cryptocurrencies makes South Korea a great testing ground for the future blockchain and crypto implementations on the wider scale

 

Conclusion


These results are showing that cryptocurrencies are not as dangerous as many perceive them. Of course, risky investment in crypto-assets can be dangerous, but this is true to any type of investment outside of crypto space. It is not cryptocurrency's inherent trait that it is risky, it is a more irresponsible use of them that could be dangerous.

 

On the other hand, people are cautious with cryptocurrencies as they perceive them as something largely disruptive. Facts are showing that this is also not the case. Very small percentage of total investment is an investment in crypto-assets. At this particular moment, the financial system is safe from crypto revolution. How long it will stay like this remains to be seen. One thing is certain, cryptocurrencies are a technology like any other and they should develop further in a much less hostile environment than today.

 

What do you think about Bank of Koreas report? Will the public image of cryptocurrencies change in the recent future? Share your opinion in our social media!