South Korea’s central bank, the Bank of Korea (BOK), has revealed that the outstanding balance of cryptocurrency accounts in the country’s domestic banks stood at nearly $2 billion ($1.8 billion) as of December 2017.
Almost One-Tenth of Total Deposits
The BOK report underlines that the outstanding amount is more than 8 percent of the total deposits that brokerage houses have with South Korea’s domestic banks. It further added that the cumulative weight of digital currency deposits is not significant enough to pose any big risk to the banking sector.
BOK stated in its report, as reported by South Korea’s mainstream media outlet, Yohan:
“The amount of crypto-asset investment is not really big, compared with other equity markets, and local financial institutions’ exposure to possible risks of digital assets is insignificant. Against this backdrop, we expect crypto-assets to have a limited impact on the South Korean financial market.”
Worth noting here is that the market value of digital currencies took a nosedive starting very early this year. Subsequently, the vast decline in market capitalization of digital assets (compared to Dec 31, 2017) is expected to have dented the net worth of cryptocurrency holdings in South Korean banks.
All being said, although $1.8 billion is a relatively lower figure compared to deposits of other asset classes, the fact that cryptos account for nearly one-tenth of local banks’ holdings is in itself a significant development. Especially considering that it’s a relatively new asset class whose credibility and sustainability have divided the global financial community into two diametrically opposite point of views.
Where Do These Figures Stand Compared to Crypto Holdings of Exchanges?
Interestingly, it looks like South Korean banks are currently holding digital assets of comparable value as those held by the biggest exchanges in the country.
Bithumb, the largest crypto exchange by trade volume, revealed in April this year that it held crypto worth more than $6 billion in user funds (in BTC and ETH). However, that figure was from when the digital asset market had hit the $900 billion milestone and top coins such as Bitcoin was trading at over $20,000.
But considering the steep fall that the global crypto economy has witnessed since the dawn of 2018, it is highly likely that the holdings of Bithumb and other major digital currency exchanges in South Korea are currently somewhere around $1 billion, if not less. According to some estimates, that could be even lower than where the valuation of South Korean banks’ crypto holdings stands in July 2018.