- Bank of Korea (BOK) has acknowledged that blockchains and decentralized platforms.
- In a report, they say it has ‘the potential to change financial paradigms’.
- The BOK also digs into the concept of decentralization.
According to reports, the BOK released a statement on
The potential of digital innovations to transform financial paradigms’. Based on the bank’s statement, ‘even though virtual assets are privately developed and managed, they have the potential to replace fiat currencies as economies become increasingly digitalized.
Apart from this, the report also comments that cryptocurrencies and blockchain technology have ‘introduced a new financial ecosystem that does not rely on conventional financial firms’.
In detail, the BOK also digs into the concept of decentralization as it agrees that decentralized platforms that facilitate P2P transactions have drastically lessened the costs of financial transactions by removing brokers and mediators.
Stablecoins were also mentioned by BOK as something with a potential role in cross-border remittances.
Although they concluded that blockchains have the potential to transform financial paradigms, the BOK doesn’t believe any crypto or DeFi will make traditional finance obsolete in the near future.
Meanwhile, as of June 2021, the DeFi market comprises a mere 0.03% of the value deposited in US banks. In fact, the majority of people still rely on brokers and mediators to conduct their financial transactions.
The report ends with a note saying,
In order for DeFi to truly become mainstream, platforms need to earn the trust of the wider public in terms of security and risk management. It also declares the necessity of a clear regulatory framework.
DeFi enthusiasts may be pleased to hear this positive acknowledgment. However, that the BOK predicts that decentralized platforms aren’t going away anytime soon, but they will continue to grow in both relevance and scale.