South Korea is ramping up its blockchain creds.
The SME and Startups Ministry of South Korea declared Busan, the country’s second-biggest city by population, a regulation-free zone for development of blockchain technology. As part of the move, the city is being turned into a controlled experiment for development of services related to public safety, tourism, and finance using blockchain technology. The idea is to apply blockchain technology to Busan’s “solid industrial bedrock” in these industries, Kim Hyeonsuk, head of the Converged Industry team of Busan City, told journalists.
Switzerland’s Zug, which dubs itself a global crypto capital, is one of the models for Busan.
Unlike Zug, however, Busan will not play host to international crypto projects. Initial Coin Offerings (ICOs), which became a popular mechanism to raise money from investors, will not be allowed. In fact, Busan authorities have made clear that the zone is not focused on development of cryptocurrencies and tokens. A planned stablecoin will have limited utility, its use restricted to that of a voucher at select locations.
The history of cryptocurrency trading in South Korea may have played a big part in determining the government’s stance. During the crypto boom of 2017, South Korea regularly ranked in the top three nations for crypto trading, despite government warnings.
But its biggest crypto exchange Bithumb has been hacked repeatedly, as many as three times in the last two years. A recent report also discovered that Bithumb was among the top exchanges displaying fake trading volume.
The Busan zone is mostly being construed as part of a larger plan by the South Korean government to create blockchain sandboxes throughout the country.
Local Initiatives to Boost Use of Blockchain Tech
Eleven regulations have been lifted for the zone, which comprises seven cities and provinces. Local and national businesses have signed up to participate in the project. For example, BNK Busan Bank will supervise blockchain management in finance. It also plans to create a stablecoin pegged to the Korean Won. Hyundai Group’s payment solution Hyundai Pay will work on the Hdac blockchain platform. Coinplug will develop a public safety solution consisting of an app that enables users to share video footage of crimes and disasters with authorities. Blockchain will be used an underlying technology for the app’s database.
By 2021, the government expects investments worth $25 million in the zone.