The South Korean central bank – the Bank of Korea (BOK) – requires Seoul to draw a line connecting central bank digital currencies (CBDCs) and cryptoassets, and expects the government will make a last-minute modification to a key crypto law that promulgates next month.
The BOK presented its proposal in a new report that incorporates input from authorities from a range of different sectors and reviewed the validity of a CBDC issuance under existing legal frameworks.
Leading legal academics from Seoul National University and Hanyang University took part in the plan.
And the report’s authors, through ZDNet Korea, presumed that the most significant element that the BOK should study should it issue a CBDC was to guarantee that “as a legal currency, [a CBDC] must have the same status as” banknotes and coins “in terms of issuance and legal weight.”
The authors continued that the terms of the new law do not seek to create a difference between crypto and CBDCs. They prompted lawmakers to set out a legal distinction before the regulation comes into force by adding new CBDC clauses – even though the nation is still a long way off digital won issuance.
The authors addressed,
“Under current legislation, virtual assets issued by institutions other than the Bank of Korea cannot be considered CBDCs, regardless of their names.”
They continued, “A CBDC is not a cryptoasset. This is true because there is a clear issuer [of the token] (namely the BOK).”
The new law outlines cryptoassets as “electronic certificates that can be traded or transferred electronically and having economic value, regardless of the presence or absence of an issuing body.” unaltered, the BOK report said, this definition would also apply, de facto, to a CBDC.
In the corresponding report, the authors declared that the BOK should take great care to ensure that a CBDC was inclusive and did not fail to meet the needs of “vulnerable individuals.”
The bank continued that it intends to launch a CBDC pilot in a “virtual environment” this year, with tests carried out on the prototype digital won’s functionality and safety features.
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