In 2020, there isn’t a nation that hasn’t researched about blockchain technology and cryptocurrencies. There is a global fintech race in progress as regulators in multiple jurisdictions are pushing towards deploying their Central Bank Digital Currencies (CBDC). Besides the transition to a digitized economy, blockchain innovation has also gained a lot of popularity.
While the idea of regulating cryptocurrencies still remains a debatable topic, a number of countries have been focusing on blockchain technology as a key area of development. Being the most transformative technology of this generation, blockchain has displayed immense potential with uses across several sectors apart from fintech.
Amongst the long list of nations building a blockchain-based ecosystem, some provinces are a few steps ahead of the rest. One such blockchain hub in South Korea.
Rapid blockchain innovation
Being the fourth-largest economy in Asia and the 11th largest in the world, the nation has been a leader in technological adoption and experimentation. It is now on the path of blockchain innovation and is fast becoming a frontrunner in this cutting-edge industry.
It first took steps to regulate cryptocurrency back in 2017, when cryptocurrencies like Bitcoin and Ethereum were reaching new all-time-highs, raising concerns about disruptive financial speculation, along with growing concerns about fraud and illegal activities.
The nation soon moved toward requiring KYC verified accounts, and later introduced a ban on initial coin offerings in 2017 that continues to remains in place. Despite the tight regulations, South Korea continued to remain a major player in the global crypto market.
Fast forward to 2020, the nation passed the amendment to the Special Reporting Act on March 5, 2020, which legalized cryptocurrencies in the nation. The amendment marked the official entry of cryptocurrencies within the legal system of the nation and the domestic blockchain industry getting re-established.
The efforts of South Korean authorities to push blockchain development have been helping pave the way for the nation to become a major crypto and blockchain hotspot. The nation also has a strong foundation of major blockchain companies like ICON, Blockco, Kakao Talk, and is also home to popular crypto exchanges like Upbit and Bithumb.
Furthermore, Bithumb has pledged to invest roughly $8 million into the Busan blockchain zone. Busan was declared a ‘regulation-free’ and has been selected as one of several regions to pilot distributed ledger tech and blockchain-based solutions. The area is modelled after Switzerland’s town of Zug, which is a popular crypto hotspot.
However, the real innovation in the nation has been with blockchain technology and its implementation in the private and public sector. The regulators in South Korea consider blockchain a “golden opportunity” for the nation and private companies have been urged to focus on implementing it.
The Vice Minister of Strategy and Finance, Koo Yun-Cheol has said:
“The size of the blockchain-related industry is expected to grow by more than 80% per year on average, and is competitively supporting foreign countries to preoccupy the market that is attracting attention as a promising technology in the future.”
According to a recent report from local outlet Shina Ilbo, the nation’s regulatory sandbox overseen by the Financial Services Commission (FSC), has helped create 380 new blockchain-based jobs and also generated $110 million in new investments.
The sandbox temporarily exempts companies from various regulations regarding financial services to allow them to focus on innovation and growth. Around 16 companies have displayed the potential to grow and have drawn more than 136.4 billion won ($110 million) in new investments.
The regulatory sandbox is helping the FSC assess the utility of blockchain technology in areas like real estate, chatbot services, and artificial intelligence-powered credit evaluation.
The nation is also working on next-generation technology, as The Daily Chain recently reported, that the South Korean Ministry of Science and ICT along with Korea Internet & Security Agency, the nation’s internet technology watchdog, is set to lead the development of identity management and verification platform for autonomous vehicles.
Adding to this, the Ministry of Science and ICT and the Ministry of Information and Communication Industry Promotion is set to launch a pilot program that aims to grant $360,000 each to nine different projects via free public offerings. The companies selected must offer services that can create economic and social value through blockchain technology.
Also, last month South Korea’s central bank announced the start of a pilot program on CBDCs. The program marked the nation’s official entry into the CBDC race and the programme is set to identify the technological and legal challenges involved to create and deploy a state-backed cryptocurrency.
It is quite evident that South Korea is en route to becoming one of the leading crypto and blockchain hubs. With the global sentiment shifting towards an all-digital future, the nation’s current efforts will have a major role in shaping the future of the entire industry as a whole.