- South Korean experts believe that cryptos are not a good choice for safe-haven investments.
- The country’s professor from Hongik University says that cryptos don’t satisfy the necessary requirements.
- The crypto sector in Korea also remains highly unregulated, with little effort to change this.
For a time, South Korea seemed like it could become a cryptocurrency hub, but there seems to have been a lack of progress when it comes to adoption and regulation. Korean tech giants recently started developing an interest in crypto, but they opted to seek out partners overseas, rather than choosing local firms.
Korean professor thinks that cryptos are not a safe investment
A new report revealed that one of the country’s experts, Professor Hong Ki-hoon of Hongik University, commented on the crypto’s ability to act as a safe haven.
The professor spoke through local media on June 11th, stating that cryptos are a ‘poor choice’ for those who are looking into safe assets to invest in during the pandemic.
The professor did not deny that the financial markets have been volatile, and that this is the reason why more people are turning to crypto. However, he still believes that Bitcoin and altcoins should not be considered safe-haven assets.
Instead, he thinks that even gold, USD, or the US Treasury bonds are a better choice. “To be a safe-haven, two conditions must be met. First, the volatility of the asset’s value must be low, and second, when market volatility is expected to increase, the value should rise. Therefore, cryptos do not meet with the conditions,” he said.
As mentioned, he addressed the growth of crypto volume during the pandemic. He said that the spirit of investing in higher volatility was only a way to compensate for depreciated asset value.
South Korea still lacks proper regulations
The report also noted the growing concerns of issues like market manipulation. Once again, these problems were traced back to the lack of regulations in the country.
As a result, investors are hesitant to join the crypto industry, despite the growing popularity of the market. Meanwhile, one anonymous expert that the report has quoted feels that individual investors are unable to manage stock risks properly. However, they also noted that it is ‘virtually impossible’ to gauge the risk factors of digital coins, noting that an investor needs to have a full understanding of them before investing.
So far, however, the South Korean Ministry of Economy and Finance seems to plan to amend the country’s Income Tax Law. The move will likely impact the profitability of using cryptocurrencies, but it will still not help regulate them.
