In The Diplomat, an online magazine on East Asian affairs, Troy Stangarone looks at Korea’s transformation into a big time player in the world crypto scene.
In a way, it follows a familiar pattern – while North Korea grabs the international headlines, South Korea has been quietly going about its business doing things (mostly) right:
“When it comes to cryptocurrency, North Korea tends to get most of the attention on the Korean Peninsula. Since 2017, North Korea has stolen $571 million from cryptocurrency exchanges and accounted for nearly 65 percent of all cryptocurrency stolen. Despite North Korea’s illicit activities in this burgeoning field, the recent acquisition of Europe’s largest cryptocurrency exchange by a South Korean investment firm is just the latest sign that South Korea is developing into a significant player on the licit side of cryptocurrency and its underlying blockchain technology. (emphasis mine)”
Stangarone notes the Korean public’s enthusiasm for cryptocurrency, conglomerates’ interest in developing and deploying blockchain technology, and crypto exchanges’ efforts to expand the use of crypto in retail payments.
He warns, however, that regulatory reform may be necessary if Korea is to continue its growth as a crypto power:
“While regulation of the cryptocurrency exchanges was an important first step to reign in the excesses of 2017, South Korea will also need to take a long view on the technology. Regulations regarding ICOs and bans on foreigners trading on South Korean exchanges, for example, may need to be revised to ensure that South Korea remains a leading player in cryptocurrency and blockchain technology.”
It’s with this concern in mind that the Korean Bar Association recently called on the government to establish a legal framework to develop the blockchain industry and protect investors – a rare move for an organization that traditionally avoids public campaigns in favor of specific technologies or business interests:
“‘We urge the government to break away from negative perceptions and hesitation, and draw up bills to help develop the blockchain industry and prevent side effects involving cryptocurrencies,’ Bar Association President Kim Hyun said at a news conference held at the parliament.”
Perhaps to just remind lawmakers what those side effects look like, one Korean cryptocurrency exchange just pulled an exit scam with USD 30 million in user funds.
Though regulations remain to be changed, Seoul is making it increasingly clear that it thinks blockchain technology is the next big thing.
The government announced last week that it was tripling its budget for blockchain projects, setting aside USD 35 million in the 2019 budget to support 12 public sector blockchain projects.
Just how optimistic is the government about blockchain? Well, pretty darn optimistic – during the meeting to decide said USD 35 million budget, Min Won-ki – the second vice minister of science and ICT – told those in attendance that he expected 10 percent of Korea’s GDP to be based on blockchain by 2025.
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