Category Archives: South Korea

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South Korea Plans Special Crypto Zone Status for Jeju Island

The South Korean island of Jeju sees itself as a potential crypto haven and has requested that the government allows it special crypto zone status.

The island’s governor made the request at a meeting with Kim Dong-yeon, Korea’s finance minister and deputy prime minister for the economy, and other government officials in an attempt to place the island at the forefront of South Korea’s crypto economy.

Jeju Province, officially Jeju Self-Governing Province, is one of the nine provinces of South Korea. According to Wikipedia, the province is situated on and conterminous with the nation’s largest island of Jeju, formerly transliterated as Cheju, Cheju Do, etc., or known as Quelpart to Europeans.

Governor Won Hee-ryong proposes making the island a hub for the development of blockchain and cryptocurrency technology and has requested that the South Korean government form a panel of specialists to plan a strategy to boost its blockchain profile. At a meeting last week, the governor commented:

“For Korea to become a leader rather than a consumer of this new global industry, we need to quickly allow [the operation of] blockchain and cryptocurrency [firms].”

The request comes on the heels of a statement by central government on Monday that it plans to spend USD 4.4 million on eight tech sectors it regards as critical, citing self-driving cars and smart factories, with an emphasis on blockchain, big data, and artificial intelligence. This spending could increase to KRW 10 trillion over the next five years according to Kim Dong-yeon. If these reports are accurate, then the government would need to train 10,000 specialists to service these new projects.

The ministry said, “The measures will help facilitate the platform economy, which in turn will help speed up innovative growth.”

It appears that the request by Jeju may not be an accident coming so quickly after the government statement of extra funds targeting new technology. Governor Won’s desire to create “Jeju Free International City” is very much in keeping with the government’s drive towards regulating blockchain so that becomes fit for purpose, freeing up current restrictions.

Moves towards deregulating ICOs in South Korea is never far from the crypto news in the Asian techno hub, with announcements in June that Korea’s Financial Convergence Association had plans to build its own blockchain hub.

A startup fund is planned for the end of 2018 with Seoul talking the talk, promising that it plans to use “drastic measures to ease regulations that have been blocking new industries and technologies from moving forward”.


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South Korea Plans Blockchain Youth Development Program

South Korea has announced plans to launch a blockchain-focused training initiative targeted at emerging talent from the country’s younger demographic.

The young participants will benefit from a six-month blockchain and technology training course covering a variety of emerging sectors, with the primary goal being stated at decreasing youth unemployment while matching individuals with job opportunities well suited to them.

The students will be trained in a total of 40 courses including blockchain development, as well as software, hardware, autonomous vehicle and drone modules. Each unit was carefully configured to match the employment personnel needed for the various industries local to South Korea.

A key objective of the plan involves building direct relationships between educational institutions and companies to coordinate an advantageous cooperation of building the skill sets that employers need from prospective employees.

In a press release on Thursday, the ministry called for a demand of future employees to participate from the beginning of the project so that the most effective outcome is reached.

Software policy officer at the Ministry of Commerce, Industry and Energy, Young-Kyung Won, noted that while unemployment of the younger generation is becoming a social problem, job mismatch is also becoming a serious issue in the country.

Through an innovative approach to fostering talent, Young-Kyung hopes that companies’ level of vision can be matched by the youths alongside developing better support networks to match them with and offer them job opportunities.

The government-led 2018 Innovative Growing Youth Talent Concentration Project has been organized collaboratively by the Ministry of Science and ICT and the Institute for Information and Communications Technology Promotion. Recruitment and selection events were held by local governments between 11 June and 10 July.

Individual trainees will be chosen through the month of August via self-selection criteria at each educational facility. The course is scheduled to begin mid-September.


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South Korea Blockchain Association Presses for Regulation Efforts

The South Korean Blockchain Enterprise Promotion Association (BEPA) is demanding for the government to speed up blockchain and cryptocurrency adoption and regulation efforts.

Time for urgency

A report from a local news outlet, Korea Joongang Daily, has said that the association filed this demand to curb the government’s focus on “negative short-term side effects” and instead urges it to observe the global blockchain race and adopt a means to reap the economic benefits sooner than later.

Yoo Joon-sand, president of BEPA told a press briefing: “Countries around the world are applying blockchain technology to all aspects of society including health care, retail and logistics.”

He adds, “But instead of welcoming the people’s fervor for the technology, the government is focused on controlling it to address negative short-term side effects. This is essentially kicking away the economic opportunities that lie in front of us.”

The blockchain push

The association, formed on 17 July, is comprised of ex-politicians and academics with significant members such as former Prime Minister Lee Soo-sung and Professor Kim Hyoung-joong, head of Korea University’s Cryptocurrency Center at the Graduate School of Information Technology.

Furthermore, with their combined technological and governmental experience, members of the association wish to also push the regulation of blockchain technologies so that they can be applied to “diverse industries”, which is expected to be a catalyst for job creation and reduce financial burdens for small business owners.

According to the report, the members of the association believe that should the nation be ready with a full-body of regulations, then South Korea can witness explosive job creation and “pave the way for Korea to lead the world in the fourth industrial revolution“.

South Korea has already made vows with the United States to collaborate on a multitude challenges and facets of this coming era, with blockchain being one of the technologies in focus.

Embracing the future

This is not the first time that the government in South Korea has been pushed by politicians and prominent organizations to ramp-up the effort to regulate the space. For two weeks in early July, the South Korean National Assembly saw a maelstrom of political parties submit draft bills to create clarifications on initial coin offerings (ICOs), cryptocurrencies and blockchain technology.

In late July, the head of the virtual currency response team for the country’s Financial Services Commission made calls for adequate legal frameworks to be implemented; this would be in order to protect cryptocurrency investors and domestic blockchain enterprises.

Recent changes to tax rules for “new-growth technologies” included tax cuts for companies engaging in blockchain and cryptocurrencies. The new rules were announced in mid-July, however, there is a chance that these benefits will not be extended to cryptocurrency exchanges.


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South Korea’s Biggest Exchange Cleared of Insolvency Charges

Following the raid of South Korea’s largest cryptocurrency exchange UPbit on insolvency charges, an audit has confirmed that all of its digital currency balance sheets have not been subject to manipulation and the platform has the total funds it claims.

Officials took action in May after concerns were raised that UPbit was inflating its trading volumes while manipulating the balance sheets to match. South Korea’s Financial Services Commission and Korea Financial Intelligence Unit took documents and hardware from the exchange’s headquarters to appraise the details in line with the anonymous tip-offs claiming its insolvency.

A recent evaluation by one of the country’s largest accounting firms, Yoojin, declared that UPbit was operating with all of the declared assets, with the results of the audit published by Korean internet provider Kakao’s subsidiary company Dunamoo. While this has reassured many local investors using the platform, the lack of a response from the local government has led critics to query the legitimacy of the audit.

Details of the audit claim that the cryptographic screening shows UPbit has around 103% of the money based on the total needed to be paid to customers, with the aggregate funds of the exchange reaching 127% of the total that it holds for customers.

The president of Dunamoo Lee Seok-woo attested the authority of the results, saying UPbit has enough money to compensate all customers whenever they wish to withdraw their funds. He also noted that the exchange would comply with regular audits in the future to prove its financial conditions are fully legally compliant.

The recent hack of South Korean exchange Bithumb ignited mistrust with the platform, pushing UPbit to the country’s number one cryptocurrency exchange spot. Shinhan Bank-backed platform Gopax is expected to overtake the trading volume of both exchanges in the near future.


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The Mystery of the Sunken Treasure and The Cryptocurrency Exchange

An unusual story has emerged linking a salvaged treasure from a sunken Russian warship with a cryptocurrency exchange, according to Reuters.

The treasure reported being worth $130 billion was claimed to have gone down with Russian Cruiser Dmitrii Donskoi in 1905 off the coast of South Korea whilst engaging Japanese warships in the area.

The Korean company who is said to have discovered the shipwreck, Shinil Group, reportedly said that they would use the salvage to back a new cryptocurrency called Shini Gold Coin and would distribute the coins to any who sign with the exchange, named ‘Donskoi International’ after the sunken vessel.

“Shinil Marine said last week it had discovered the wreck of the Dmitrii Donskoi, a Russian armoured cruiser sunk in 1905 after fighting Japanese warships off South Korea’s Ulleung Island, and that a staggering 150 trillion won ($130 billion) of gold was on board”

The news very quickly attracted the attention of South Korea’s financial watchdog, the Financial Supervisory Service (FSS) who began to investigate “whether the company’s claims were part of any share price manipulation or other unlawful trade.”

A local news source also stated that FSS Governor Yoon Suk-heun said that the agency is investigating related “cryptocurrency issues.” This seemed to provoke a rapid change of heart by Shinil group who began backtracking rapidly on their alleged claims.

The source DToday reported again following a news conference in Seoul on Thursday that the FSS Governor said that the company had not reported the existence of gold, stating:

“The [unverified] reports said the Donskoi held 200 tonnes of gold but that would only be 10 trillion won [~$9 billion] at current value … We apologize to the public for the irresponsible citation.”

In a further twist to this tale of sunken gold coins and claims and counterclaims, Reuters reported on Thursday that Shinil Marine:

“…denied any connection with the cryptocurrency it said was run by a different company with the same name and said it had changed its name. A phone number on the cryptocurrency exchange’s website led to the company until last week.”

The exchange claims that that the coin and wallets have been developed and the token is due for listing on 10 exchanges between September and October this year. This includes the Shinil Group’s Donskoi international exchange.

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Growing Urgency for South Korean Crypto Legislation Approval

Hong Seong-ki, head of the virtual currency response team at South Korea’s Financial Services Commission (FSC), has called for lawmakers to quickly pass the first cryptocurrency bill in the country over security and money-laundering fears.

Investor protection

Hong makes acknowledgements that South Korea is lacking the frameworks to store and manage the burgeoning billions of dollars in cryptocurrencies due to its insufficient security measures.

On 25 July, Seong-ki said in an interview with Bloomberg, “While crypto markets have seen rapid growth, such trading platforms don’t seem to be well-enough prepared in terms of security… We’re trying to legislate the most urgent and important things first, aiming for money-laundering prevention and investor protection. The bill should be passed as soon as possible.”

Lawmakers in South Korea are being urged to pass the bill due to the accelerating growth of the cryptocurrency markets. A newly-drafted regulation framework seeks to legitimize domestic cryptocurrency and blockchain-related business practices for the first time in the country.

In the interview, Seong-ki made emphasis on the fact that the bill is not aimed at emerging cryptocurrency exchanges or trading generally speaking, but instead is there to protect users and investors through the implementation of vigorous internal management systems to prevent the large-scale and frequent hacks that are rife in South Korea.

Security issues

Significant hacking scandals in June 2018 forced regulators to speed up attempts to regulate cryptocurrency exchanges, putting a bill into motion that gives focus to money laundering. Should the bill pass, virtual currency exchanges will be required to report to the Financial Intelligence Unit (FIU) and be supervised regularly by the entity.

In late June, Bithumb suffered a USD 31 million hack; although, South Korea’s largest exchange did apply diligent measures to increase security against “high-risk” countries. Shortly after, the exchange managed to recover USD 14 million of the stolen crypto, with thanks to a collaborative effort between itself and other exchanges.

Rallying around blockchain

In May 2018, the South Korean government began setting in motion revisions to “unify” with the G20’s recommendations on cryptocurrency regulations.

From 13 July to 26 July, South Korean lawmakers from various political parties have been making draft bill submissions to create clearer regulations on initial coin offerings (ICOs), cryptocurrencies and blockchain technology.

Furthermore, it is expected that also on 26 July, further details regarding the “new-growth technology” tax credit scheme are said to be arriving.

With the Fourth Industrial Revolution around the corner, the Korean FSC announced a new governing body called the Financial Innovation Bureau, designed to protect consumers against risks that will present themselves in an age of financial technology innovations.


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NEM Strengthens Regional Foothold with Two New Blockchain Hubs in Australasia

Creators of the XEM digital currency NEM have announced that the company is to open two blockchain hubs in Australia and New Zealand.

The Australian hub will be located in Brisbane at Fortitude Valley and its New Zealand counterpart will be established in Westport. NEM Foundation’s director for Australia and NZ, Jason Lee, said that both hubs will be represented by a NEM staff member in place with a role to “educate and inform the general public and businesses about the benefits and applications of blockchain”.

The Australian hub is hosted by TravelByBit which promotes the use of cryptocurrencies in Australia’s tourism industry and has become a supporter of numerous businesses which accept Bitcoin and other digital currencies for food, services and travel around the country.

Caleb Yeoh of TravelByBit, who is also a board member of Blockchain Australia, welcomes the NEM connections and sees it as another positive move towards Australia’s wider cryptocurrency “education and adoption”.

The New Zealand hub in Westport, just a 45-minute flight from New Zealand’s capital Wellington, will also include a co-working space and will provide regular educational and engagement activities as well as a NEM incubation platform.

New Zealand’s Minister of State for Trade and Export Damien O’Connor is positive that such hubs demonstrate the country’s desire to be in the vanguard of promoting new technologies in the region. He stated:

“Blockchain development represents an exciting new frontier for startups in New Zealand and it’s great to see that going on in our regions with such strong international support.”

The XEM Foundation is now a feature of 47 countries around the world and the two regional hubs see themselves as key in being able to encourage local startups and to promote NEM’s Global Community Fund which currently has $ 300 million allocated to it annually.

Asian markets, primarily Japan and South Korea, will be encouraged by XEM’s new presence in Australia and New Zealand, giving the company a real foothold in Australasia.


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South Korean Political Parties to Propose New Crypto Laws

Beginning today and lasting until 26 July 2018, South Korean lawmakers will be submitting draft bills in a race to introduce clarify regulations on initial coin offerings (ICOs), cryptocurrencies and blockchain technology.

Partisan blockchain supporters

According to a report from local media outlet The Korea Times, the National Assembly is expected to see a flurry of Korean political parties over this period proposing bills. Representative Park Yong-jin of the ruling Democratic Party of Korea, Chung Tae-ok of the main opposition Liberty Part Korea (LPK) and Choung Byoung-gug, member of the minor opposition of the Bareun Mirae Party, are apparently “most committed to the issue”.

Skepticism on whether or not any bills will make it to law is presumed to be on the basis that opinion is still “widely divided” on the matter, that and other more pressing political and economic concerns that South Korea is presently dealing with.

On 19 July, Rep Song Hee-kyung of the LPK will be hosting a policy debate giving focus to the security of domestic cryptocurrency exchanges. Co-hosting the debate is the Korea Internet and Security Agency (KISA) who, since early July, has been inspecting crypto exchanges.

Recent headlines

Regardless of the divide, this period will have profound impacts on moving discussions forward in a nation that is endlessly making blockchain- and cryptocurrency-related headlines. On 8 July, the nation’s financial watchdog released an official statement revealing that there had been significant revisions made its regulatory stance in line with G20 recommendations.

A day later, Bitcoin News reported that the South Korean Financial Services Commission (FSC) had brought forth new guidelines for cryptocurrency regulations in a new classification system for the industry as well as new anti-money laundering rules.

Regulating ICOs and looking ahead

Perhaps one of the most significant parts of the report from the Korea Times was the mention of ICO laws being proposed. Since September 2017, ICOs have been banned in the crypto-centric nation, however, in early May 2018, there were reports of key governmental figures and legislators were banding together to draft an ICO legalisation bill.

Motivations behind the legalisation bill were noble at best, South Korean companies were fundraising in overseas territories such as Switzerland and Singapore. However, this is expensive for the operators of these ICOs as well as creating risks of scams fraud ICOs to investors.

The regulatory response also comes shortly after two major cryptocurrencies exchanges fell victim to very costly hacks, forcing regulators and lawmakers to propose amendments to present legislation and tighten the monitoring of South Korean exchanges.

South Korea appears to be gearing up for a blockchain heavy future, despite the negative press that often causes strict and industry stifling regulations to be placed on exchanges, ICOs and cryptocurrencies, South Korea has proven time and again that rationality is key.


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Which Countries Are Most Likely to Adopt Bitcoin First?

Bitcoin replacing a country’s government currency would be a huge achievement for cryptocurrency as well as a historical milestone. But which countries are most likely to adopt such a nascent currency?

One of the biggest drivers for adopting a cryptocurrency would be necessity. Countries where citizens experience hyperinflation, political instability, or other factors that shake confidence in a government currency typically see higher demand in alternative currencies like Bitcoin.

Countries possibly adopting Bitcoin on a major scale, for this reason, would be Iran, Venezuela and Argentina, to name a few.

Iran has made headlines with plans to withdraw EUR 300 million from German banks. Rising tension since 2015, when the US left the Nuclear Agreement, has only amplified with Trump entering the presidency.

The tension has only weakened confidence in the Iranian rial, leading to higher than market prices within Iran borders. Couple this with the US sanctions placed restricting liquidity and hyperinflation of 112%, and Bitcoin easily becomes the currency of choice for Iranian citizens.

While rial’s hyperinflation will lead to holders of the currency losing more than half of their value, this is nothing compared to Venezuela’s economic crisis.

A year ago, a cup of coffee in Venezuela was 2,200 Venezuelan bolivar (VEF), or around USD 0.20. Since then, inflation has been rampant, causing that same cup to be sold at VEF 1,400,000, for an effective annual inflation rate above 60,000%.

This has led to an extreme demand for the cryptocurrency; peer-to-peer exchange Localbitcoins shows Venezuela traders selling Bitcoin at rates of VEF 9 billion (USD 75,000) to VEF 19.5 Billion (USD 158,531). Despite these massive premiums and the cryptocurrency experiencing a correction of its own, Bitcoin is still a more attractive option than the fiat currency.

Such an extreme devaluation of the currency makes Venezuela a prime country to embrace Bitcoin wholeheartedly.

Argentina is in a similar situation and currently has the higher interest rate in the world (40%). Continually rising prices coupled with increasing unemployment rates makes Bitcoin a viable currency in this case, over the Argentine peso.

Cashless societies could also be primed for a crypto take over but cryptocurrency needs a lot of refinement before this could become a reality.

Contactless payment methods are already very convenient and with credit cards, even offer cashback rewards and customer protection. For cryptocurrency to penetrate markets like Canada, Sweden and the UK, digital currencies must not only offer similar characteristics but be much better than existing systems.

A good scaling solution needs to put in place as well, in order for Bitcoin (or whatever cryptocurrency a society adopts) to handle the number of transactions.

The third set of countries likely to adopt Bitcoin are the ones that are already open to cryptocurrency-related businesses, regulatory wise.

Countries that fall into this category include Japan, Estonia, Singapore, Australia, and South Korea. Sweden also goes into this category because despite its cashless society, recognizing Bitcoin as a legal form of payment.

Countries that are Bitcoin-friendly will typically have a higher percentage of citizens already exposed and actively using the cryptocurrency, making it far easier for Bitcoin to become widespread.

Being on welcoming turf also allows companies to come in and introduce new use case scenarios for the cryptocurrency, thus improving Bitcoin’s penetration rates.

Bitcoin is a fairly new currency and as more people begin to understand and classify it, more countries will become more receptive to the decentralized money. It will be interesting to see which country becomes to adopt Bitcoin as a dominant currency and if it’s from necessity, convenience or another reasons.


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South Korea Introduces New Crypto and Blockchain Classification Guidelines

The South Korean Financial Services Commission (FSC) has revealed new guidelines for cryptocurrency regulations, just as the nation’s central bank, the Bank of Korea (BOK), reported that total balance of Korean cryptocurrency investment as of December 2017 stood at almost USD 1.8 billion.

Recent events

South Korea has made frequent crypto-positive headlines in regards to cryptocurrency regulation and blockchain technology adoption. Recent news of major hacking attacks provoked a swift regulatory response from the South Korean government in June, sparking some concerns over how strict these regulations would be.

However, South Korea has been making significant efforts to revise these regulations in a positive light; regulators plan to ease the rules on regulations and the classification of cryptocurrencies in line with the G20 recommendations.

Bank of Korea’s crypto report

Local media outlet Yonhap News reported on 6 July that BOK released a report regarding the significant virtual crypto-assets being held by the nation’s commercial banks. Totalling KRW 2 trillion (USD 1.79 billion) as of December last year, the figure sits at roughly 8% of the total deposits by the country’s brokerage houses, which are worth 26 trillion won.

The BOK doesn’t see this as particularly significant, however, despite the cryptocurrency craze that appears to be sweeping the nation.

The BOK report said: “The amount of crypto-asset investment is not really big, compared with other equity markets, and local financial institutions’ exposure to possible risks of digital assets is insignificant… Against this backdrop, we expect crypto-assets to have a limited impact on the South Korean financial market.”

While this may not be considered to have a significant impact nationally, South Korea virtual currency trading accounted for approximately 12% of global crypto-trading volumes, making the nation a powerful market force internationally.

New classification system

Local media portal The BChain provided a detailed report that delved into the present details of the new crypto and blockchain classification system for the industry, which is broken down into ten categories including decentralized applications, blockchain systems, and cryptocurrency exchanges.

On 10 July, South Korea will begin enforcing the anti-money laundering banking rules on cryptocurrency settlements created by the FSC. Banks and other financial institutions in the country are to be obliged to carry out due diligence procedures for crypto-exchanges to their non-client accounts, as well as share overseas digital trading platform information with the FSC, and immediately stop suspicious crypto-transactions.

By the end of July, the government is expected to announce the final draft for the new regulations after it has conducted opinion research from more than 160 institutions. The survey on the nascent industry this year will provide data that is expected to be a positive and prominent guide for blockchain and cryptocurrency regulation.


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