Bank of Korea (BOK) governor Lee Ju-yeol dismissed the possibility of accepting digital currencies as legal fiat while speaking at a National Assembly audit of the BOK.

According to the Yonhap News Agency, Lee claimed it was “difficult” to look at cryptocurrencies as money, particularly in light of the definition given by Bank of International Settlements (BIS), which is globally acknowledged as the “bank of central banks”. Therefore, it needs to be regulated as a commodity.

 “Regulation [for cryptocurrencies] is appropriate because it is regarded as a commodity. It is not [eligible for] regulation at the level of money.”

The regulation of cryptocurrencies is not a new subject in South Korea. In August this year, a lawmaker put forth a proposal for introducing amendments to the country's Electronic Financial Transaction Act, which would allow for closer regulation of digital currencies. In addition, the country’s Financial Supervisory Service (FSS) issued a ban on Initial Coin Offerings last month. However, South Korea remains one of the largest Bitcoin trading markets in the world.

In addition to commenting on the status of the Bitcoin, Lee also hinted at a government-issued cryptocurrency, claiming that there is:

“a possibility that the central bank's digital money will be issued in the near future [and it] is likely to become a means of payment specialized for interbank transactions or central bank transactions”.

A government-issued virtual currency could be the next step, after a digital currency task force established last year (which included the BOK) failed to reach consensus on regulation and licensing rules for Bitcoin exchanges and the wider cryptocurrency industry.

During the course of the audit, the governor was also questioned about the Bank of Korea’s lack of research on cryptocurrencies, to which he admitted:

“We also refer to a lot of virtual currency research conducted in countries like Sweden. The Bank of Korea will also put more emphasis on virtual currency research.”