As claims have recently emerged in political circles that digital assets should be used to break through 3,000 on the KOSDAQ, analysts in the securities industry said the decentralization of digital assets could be re-intermediated during the process of being incorporated into the institutional system, weakening the effect of financial innovation.

On the morning of the 2nd, the KOSPI appears on the electronic board in the dealing room at Hana Bank in Jung-gu, Seoul, as the index breaks through the 4,230 level on the first trading day of the New Year and sets an intraday record high. The KOSPI opens unchanged from the previous transaction day (4,214.17) at 4,214.17, and the KOSDAQ index opens unchanged from the previous transaction day (925.47) at 925.47. The won–dollar exchange rate starts at 1,440 won, down 7 won from the previous transaction day's weekly trading closing price (1,447 won). /Courtesy of News1

Earlier, on the 22nd, President Lee Jae-myung had lunch at the Blue House with members of the Democratic Party of Korea special committee on KOSPI 5000. Democratic Party of Korea lawmaker Min Byung-deok is said to have proposed using digital finance infrastructure such as security token offerings (STOs) and a won stablecoin to resolve the lack of liquidity in the KOSDAQ market.

Yang Hyun-kyung, a researcher at iM Securities, said, "It is necessary to note that the practical effect of the policy could vary greatly depending on the details of future legislation."

The explanation is that specific provisions of the Digital Asset Basic Act, the issuer and supervisory framework for stablecoins, the scope of permission for initial coin offerings (ICOs), and the disclosure and liability structures must be clearly designed to lead to improved institutional trust.

Yang said, "If the intensity of regulation is strengthened more than expected or the implementation timing is delayed, it is hard to rule out the possibility that current expectations will act as a short-term adjustment factor."

Concerns were also raised about the process of incorporation into the institutional system. Yang added, "The core innovation that digital assets presented lies in 'decentralization,' which reduces transaction costs by minimizing intermediaries," and "if the roles of existing financial institutions such as banks, custodians, and licensed exchanges expand in the process of incorporation into the institutional system, this could lead to re-intermediation."

If it leads to re-intermediation, there is a possibility that the fee-saving effect and the strength of financial innovation will be weaker than the market expects.

Yang explained, "Incorporating digital assets into the institutional system does not immediately mean an expansion of financial innovation, and it should also be considered that it could act as a factor constraining the speed and scope of innovation."

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