Category Archives: South Korea

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South Korea Sets November Date for ICO Legal Status

The legal status of initial coin offerings (ICOs) in South Korea will be decided on in November, according to a government official.

Decisive

According to a local media outlet, Hong Nam-ki, chief of the Office for Government Coordination, provided insight with regards to the government’s position on ICOs. In September, the Financial Supervisory Service (FSS) began surveying domestic blockchain companies to gather their expertise and opinions on the present framework.

Speaking at the annual South Korean National Assembly audit, Hoong said that officials in the pro-blockchain nation have held several discussions on ICOs adding, “Once the survey results are in by end-October, we plan to finalize the government’s stance.”

Revealing of domestic blockchain ambitions for the decision, Hong said, “We did the survey as some companies are conducting or preparing for ICOs despite the ban here.”

Urgency

In September, the FSS reserved a bullish position on ICOs when FSS Governor Yoon Suk-heun spoke with international regulators in Seoul. At this meeting, he suggested an “international discipline system” for virtual currencies and ICOs.

During questioning, member of the ruling Democratic Party Jeon Haecheol backed the lifting of the ban saying, “If we waste time, the blockchain industry could face huge difficulties. We need to look at very realistic and specific ways to nurture the blockchain industry, and I think permitting ICOs is one of them.”

This argument echoes previous statements made by other Democratic party members. Last week, Min Byung-Doo spoke before the National Assembly and made a firm case for ICOs in South Korea, believing the ban would only damage the nation’s fast-emerging and innovative blockchain industry, impacting its position as a global player.

Most recently, the chairman of the Korean Blockchain Association also presented ICOs as a way to boost the economy and create new jobs, urging for the government to nurture the domestic blockchain industry, not stifle it with overcautious regulation.

Contention

However, the divisive issue of ICOs remains just that in South Korea, despite the nation demonstrating blockchain excellence time and time again. The chief of the Financial Services Commission (FSC), Chairman Choi Jong-ku, recently revealed a firm anti-ICO stance.

Speaking at the annual parliamentary meeting, local media outlet Yonhap News quoted Choi saying: “Although many people call for the government to allow initial coin offerings, there are still uncertainties related to such a move as well as the possibility of serious fallouts.”

That said, it is important to note that the chairman isn’t necessarily anti-blockchain. As reported, he believes it’s not necessary to equate virtual currencies and blockchain. It is a similar attitude to that of China who banned cryptocurrencies and ICOs altogether but has been adopting blockchain at accelerating rates.

Nevertheless, this doesn’t appear to have thwarted crypto-enthusiasm in the nation. With some startups launching cryptocurrencies regardless of the ban, South Korea could find itself in a similar position as China has should the ban remain in place.

 

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Bithumb Acquired for $354 Million by Singapore Medical Group

South Korean cryptocurrency exchange Bithumb has sold majority control for USD 354 million to a Singapore-based medical group, according to the latest Reuters update.

Bk Global Consortium has acquired the 51 per cent share in the exchange necessary to give it overall control. The deal was signed by BK International Consortium, a blockchain investment company formed by BK International, a plastic surgical procedures clinical team in Singapore.

The deal means that Bithumb, South Korea’s largest crypto exchange by volume, passes over its controlling stake from BTC Holdings, who had previously held 76% of the company’s equity, to the new stakeholders.

Bithumb, with daily trading volume near USD 400 million, is the sixth-largest in the world behind Binance, OKEx, Huobi, Bitfinex, and Upbit. A total of 37 different cryptocurrencies are traded on the exchange.

The new premier stakeholder in Bithumb is plastic surgeon Kim Byung Gun, a South Korean cryptocurrency investor who had already launched his own ICO consulting firm and platform last August. The deal with BK global priced the major South Korean exchange at over KRW 1 trillion won (USD 880 million). News Asia observed:

“Kim, who demonstrated his multinational management ability in the field of medical care, has invested in fintech [and] blockchain… companies in Singapore.”

Although beset by a major hacking in June of this year resulting in the loss of KRW 35 billion (USD 40 million), the exchange has still made significant gains through the first half of 2018 estimated to be around USD 35 million. The suspension of withdrawals and the opening of new accounts, however, led to a significant drop in volume at the time.

The new major stakeholder is setting his targets high, with plans to create a new platform similar that that of Binance and San Francisco exchange giant Coinbase. Kim also wants to create a blockchain e-commerce system in partnership with Singapore’s e-marketplace Q2 along with talk of a fiat-backed stablecoin being developed in the future.

 

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Korean Blockchain Association Argues to Legalize ICOs to Boost Startups, Save Crypto Exchanges

The battle to for global blockchain supremacy rages on in South Korea as the head of the Korean Blockchain Association makes further calls to legalize initial coin offerings (ICOs).

Economic rhetoric

Chin Dae-je, chairman of the Korean Blockchain Association, made a strong case for the presently banned fundraising method whilst speaking at a National Assembly Library seminar in Yeouido, western Seoul.

Believing that ICOs are the key to creating new jobs, boosting the economy and producing innovative world-leading blockchain startups, the chairman said:

“The government should implement guidelines to nurture the domestic blockchain industry, which will help Korea emerge as a global industry leader… Startups who comply with guidelines should be allowed to launch ICOs.”

ICOs have been a point of contention in many nations as they struggle to classify and regulate cryptocurrency tokens. Furthermore, ICOs have a muddied history of scams and fraudulent activities that caused knee-jerk responses from many governments such as the United States and South Korea, who banned ICOs or made them incredibly difficult to launch.

While investor and consumer protections have been at the crux of the contentious debate, so has the stifling of domestic blockchain enterprise and innovation in South Korea. According to the report, disallowing domestic ICOs has resulted in startups setting up shop in jurisdictions that accommodate ICOs such as Hong Kong, Japan, and Thailand.

Despite this claim, South Korea is home to a robust blockchain market with major investors and traditional companies beginning to enter the space and drive innovation. In addition to this, city governments, as well as national government entities, are largely in favor of backing the technology through public sector pilot projects, funding, education, and implementation.

Team effort

The Korean Blockchain Association is no underdog however in its mission to legitimize ICOs; in September the governor of the Financial Supervisory Service called for an international standard for ICO and cryptocurrency regulations.

Furthermore, the Committee Chairman of the National Policy Committee spoke at the Korean National Assembly, furthering the argument that the present stance is causing global competition to get ahead.

As reported by local media outlet Korea Joongang Daily, Chin said, “By regulating and allowing ICOs, we can nurture start-ups with high potential, create jobs and reduce youth unemployment […] We can designate public or private organizations like the Korean Blockchain Association to look over the ICO white papers and verify the purpose of their fundraising.”

During his proposal, Chin offered up his organization as well as suggested other public or private entities as potential regulatory bodies that would oversee the verification of ICO whitepapers.

Trouble in tandem

Also backing cryptocurrency exchanges, Chin proposed for the government to make it easier for exchanges to set up new user accounts for Korean fiat deposits and withdrawals. He believes that should an exchange adhere to an approved standard of security measures, it should be allowed to “issue new virtual accounts”.

Chin considers these issues to have a knock-on effect to one another, arguing that if domestic exchanges disappear, then local startups seeking to gain funding through ICOs will be up against significant financial challenges and would result in domestic cryptocurrencies being listed on to foreign exchanges.

Highlighting the present impacts he said, “Korean exchanges that were ranked as the fourth or sixth-largest in the world before are dropping to below 20th place now.”

Also speaking at the seminar was Democratic Party representative Min Byung-doo, who has been backing pro-blockchain legislation. He said, “We cannot completely close the door on ICOs… The government needs to promote the blockchain industry by cooperating with the National Assembly and blockchain associations to curb scams, speculation and money laundering.”

 

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Seoul Mayor Unveils Broad 5-Year Blockchain Infrastructure Plan

Speaking in Zug, Europe’s “Crypto Valley”, Seoul Mayor Park Won-soon, reaffirmed his campaign promises by announcing a robust plan for blockchain funding and development in the capital city.

Blockchain hubs

During his Crypto Valley stop on an 11-day European excursion, Park revealed his intentions to foster blockchain technologies in Seoul with a city government fund of KRW 100 billion (USD 88.9 million) for blockchain startups by 2022.

Korean news website Joongang Daily reported that local government entities will too be building on this. The Seoul Metropolitan Government said that it is set to establish two technology complexes by 2021; it will house a total of 200 blockchain companies at the Gaepo Digital Innovation Park and the Seoul Innovation Hub.

In a statement, the Seoul Metropolitan Government also said, “In the Gaepo Digital Innovation Park, we intend to build a separate blockchain building by 2021 to attract start-ups, small and medium-sized companies as well as conglomerates working in the field both in and out of the country to do more R&D work in the sector.”

There are also plans in place to establish two training centers at these locations to nurture a new generation of 730 blockchain experts over the next five years. South Korea’s Ministry of Science and ICT approximates that there are presently around 600 blockchain experts in Korea, claiming that this is not enough to have a “globally competitive edge in the sector”.

Crypto Valley

The famed Crypto Valley of Zug in Switzerland is where renowned blockchain firms such as the Ethereum Foundation and ConsenSys operate. According to South Korean media outlet Yonhap News, Zug is also home to around 250 “blockchain-based” companies.

Park said at Zug city hall, “It is the plan of the Seoul city government to create an ecosystem of blockchain here, with hopes that the city will be globally recognized as a blockchain hub… We will try to attract many blockchain experts into Seoul, just like Zug. For this, we will need to establish an environment that is friendly for innovative blockchain companies.”

Seoul, “Testbed City”

The city is also to experiment with 14 blockchain projects over these next five years, as part of this plan, blockchain technology will be implemented into Seoul’s administrative processes, which Park believes will “set a precedent for all cities in Korea”.

Referencing the 1.15 million people in Seoul who are recipients of welfare funds, the mayor believes that the blockchain will remove the difficulties of paperwork and verification processes that usually go through multiple agencies before they can get support.

He adds, “Seoul is truly a testbed city for the technology. And I think if anyone, the city government of Seoul should lead this innovation.”

A notable project that was revealed is the combination of blockchain tech and a voting platform, which according to the city government, will increase public confidence in vote results. This project appears to offer versatile options beyond that of the political spheres.

To give an example, Park described a scenario in which tenants of an apartment complex in Seoul could vote on whether or not it should be renovated, and that blockchain technology enables this system to be trustworthy and increase voter turnouts.

 

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South Korea to Reject Crypto Exchanges as Venture Firms, Doubling Tax Obligations

The South Korean government is expected to reject the continuation of designation of cryptocurrency exchanges and other blockchain projects as venture firms. The move will create problems for cryptocurrency startups as the taxes on them are expected to double in the light of this move.

The legislation was first proposed by the Small and Medium Enterprises (SMEs) Ministry of the government back in August. It called for a revision of the current designation of cryptocurrency exchanges and advised the government to remove them from the official classified list of venture firms.

According to the SMEs ministry report: “Under the new government policy, cryptocurrency exchanges that will be newly set up this month or later cannot be certified as venture firms.”

While at the time, the government was undecided about the matter, it is now learned that it will stick to the advice of the ministry and is set to degrade the status of the crypto projects and they will now be designated alongside businesses belonging to gambling, bar and entertainment industry, thus doubling the taxes. The sector is also likely to lose several other perks and financial incentives offered to the VCs and domestic small businesses.

While lobby groups are rushing to the capital Seoul to warn the government against taking such measures, the Korea Blockchain Association and other blockchain association are leading an outcry against the proposed measures.

The lack of tax benefits might also force the South Korean exchanges to move overseas, thus causing harm to the local blockchain and crypto community currently producing some of the best blockchain research and products in the world.

 

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South Korean National Policy Pushes to Legalize ICOs

The Committee Chairman of South Korea’s National Policy Committee has spoken before the National Assembly and called for the legalization of initial coin offerings (ICOs).

ICO contention

Min Byung-Doo, also a member of the ruling Democratic party, spoke at a session of the National Assembly on 2 October, where the national administration is subject to questioning from lawmakers.

According to a local media outlet, Byung-Doo was adamant that “Korea should also allow ICOs”, adding that appropriate regulations would work especially should the crypto industry self-regulate and introduce safety standards that can protect against fraud and money laundering.

However, the government is still reluctant to alleviate its tough stance on the funding method. Chief of the Financial Innovation Commission (FIC) for the Financial Service Commission (FSC), Son Hyun-do, said that ICOs were difficult to permit due to “social-pathological phenomena and the possibility of price manipulation”.

Others such as policy adviser to the Justice Department, Lee Jong Keun, said last month at a parliamentary debate, “We must keep strict institutional regulations consistent with the dangers of cryptography.”

Competitor

Nevertheless, there are other members of the FSC who have taken a similar stance to Byung-Doo and urged the government to get legislation and regulation bills passed quickly.

Byung-Doo made the case that the ICO ban was dampening South Korea’s ability to compete on the global blockchain stage effectively.

With regards to the nation’s presently booming blockchain industry, he said: “Blockchain-related industries were at the top of the world in terms of competitiveness, but the competitiveness in ICOs has dropped sharply. Now, 75% of projects in the industry belong to the United States only, which is the world’s top competitor.”

Byung-Doo also referenced two of the largest ICO funding rounds in recent memory, presenting them as economically beneficial, saying, “We can see that the flow of investment is clearly changing compared to ICO and angel fundraising. The ICO [method] has raised USD 1.7 billion for Telegram and USD 4 billion for Block.One, it is getting bigger and bigger.”

As ICOs continue to be a global trend, the lawmaker does not wish to see South Korea fall behind, which could happen should prohibition of token sales continue.

A matter of time?

South Korea’s National Assembly has been host to several discussions surrounding blockchain, cryptocurrencies, and ICOs. The growing sense of urgency is likely derived from its consistent push to adopt blockchain technologies.

In recent months, South Korea has seen the establishment of the Blockchain Law Society, an entity that aims to advance legal and regulatory proceedings with the intention of also studying the technology and “promote interdisciplinary collaborations between diverse areas”.

Other facets that support the technology at all levels in the nation have been emerging this year. This included tax breaks for blockchain startups, education efforts, gigantic governmental funding for innovative technologies and enterprises and significant backing from the Ministry of Science and ICT.

Most recently, it became clear that blockchain was to grow in South Korea with institutional investors and domestic companies entering the industry. With big money in play and many other plates spinning such as the Jeju Island proposal, Byung-Doo’s stance is generously backed by positive evidence.

 

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VC Funding for Crypto and Blockchain Records 280% Annual Growth

Venture capital (VC) is fast becoming the new way to invest in blockchain companies outstripping ICOs, according to a new study.

VC investments generally come from hedge funds, private equity firms, or persons of extreme wealth, with the resources to invest funds into start-ups with the hopes of quality returns on the original investment.

The new study conducted by Diar, the weekly institutional publication on digital currency, assets, payments and regulation, suggests that the impetus has clearly shifted with VC companies now pouring their money into projects at a rising rate. VC research platform Pitchbook confirms that within the first nine months of 2018, USD 3.9 billion has been raised for VC blockchain enterprises, a 280% rise on the previous year.

The growing interest by venture capital companies in blockchain projects, juxtaposed against a diminishing number of ICOs, thought to be a result of government intervention and stricter rules being enforced on crypto startups who get their funding from ICOs.

The data also shows that the size of VC investments has gone up with the frequency, with median size of deals increasing over USD 1 million in this year alone, showing that as confidence in the industry grows, so does the preparedness to take a higher element of risk. The most active VC investor with 110 deals related to crypto and blockchain is Digital Currency Group (DCG), followed by Blockchain Capital and Pantera Capital with 100 deals.

On the heels of this latest news, Bitcoin News reported yesterday that South Korea’s largest VC company announced investments in TEMCO, a blockchain solution company for supply chain management built on the EOS network.

Korea Investment Partners (KIP) of Seoul has investments in over 50 companies, 20 private equity funds and a significant roster of partners all over the world. Its investment into TEMCO is of undisclosed value although according to a press release, it claims to be the first ICO funded by “major venture capital”.

In terms of where the new wave of venture capital is going to, reports suggest that the US, UK, and Switzerland top the list.

 

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South Korea’s Largest VC Firm Invests in Supply Chain Blockchain

The largest venture capital (VC) firm in South Korea has formally announced that is has made an investment in TEMCO, a blockchain solution company for supply chain management built on the EOS network.

Investment opportunity

Korea Investment Partners (KIP) of Seoul has investments in over 50 companies, 20 private equity funds and a significant roster of partners all over the world. Its investment into TEMCO is of undisclosed value although according to a press release, it claims to be the first initial coin offering (ICO) funded by “major venture capital”.

This is not the first time that KIP has invested in blockchain-related companies such as Bithumb, Kakao, and Korbit, as well as other companies such as Naver who have been pursuing blockchain technologies in South Korea.

TEMCO’s supply chain project has been receiving support from other institutional investors such as RSK Bitcoin Smart Contracts, TLDR Capital and global blockchain accelerator Blockchaini, among others.

The announcement is indicative of a growing demand within South Korean markets to utilize blockchain solutions and products, going beyond the early trends of cryptocurrency exchanges that had previously held market dominance among investors.

Blockchain markets

Throughout 2018, South Korea has wrestled tirelessly to establish regulations and laws for ICOs, taxation, cryptocurrency classification and other vital facets of the industry. However, in the past month or so, there has been a significant progress with governmental support for new start-ups with blockchain being included in significant rounds of funding for public services.

Recent reports reflect the growing demand for blockchain 3.0 technologies from several of South Koreas largest companies. Naver and Kakao who are part of KIPs investment portfolio have begun unveiling their latest ambitions in blockchain.

Naver, the nation’s largest internet content service company has produced a multi-media payments and compensation service platform, and Kakao is soon to unveil Clayton, a project developed by its Ground X subsidiary.

2019 outcomes

Further progressions could be made should the Jeju Island special zone proposal come to fruition in the near future. The already self-governing island is seeking permissions to allow for the currently banned fundraising method of ICOs to be conducted on the island, and furthermore, become something similar to that of Malta, a blockchain island and hub for industry innovation.

For South Korea, blockchain technologies are becoming a regular part of political, social and industry discourse. 2019 is set to see public sector blockchain pilots double, in addition to this, unprecedented levels of funding for blockchain as well as other innovative technologies will also further catalyze South Korea’s world-leading efforts to adopt blockchain into its mainstream.

 

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South Korean Firms Actively Adopting, Generating Blockchain 3.0 Tech

Third-generation blockchain projects are in hot competition in South Korea’s bustling blockchain and cryptocurrency industries.

The term “Blockchain 3.0” has been cropping up a fair amount in 2018 to a mix of skepticism as to when it will truly arrive, with projects such as EOS and several others supposedly leading this race. In the case of South Korea, there is quite some fanfare as domestic companies begin to pair up with these new technologies.

Third generation

Blockchain 1.0 refers to the first and early technologies which were simply cryptocurrencies; Litecoin and Bitcoin are prime examples of this era. Blockchain 2.0 came about as developers began to understand that the technology could do much more than document transactions.

Ethereum is often touted as the beginning of the 2.0 generation with the introduction of smart contract technology on a blockchain and adoption of blockchain in enterprises. Industries grew given the versatile applications of smart contracts.

This new generation of Blockchain 3.0 is thought to be the catalyst for mainstream adoption. This latest round of solutions and platforms are said to address the issues of their predecessors with higher scalability, interoperability, governance and many others on the list.

As reported by Business Korea on 27 September, there a handful of blockchain enterprises that are becoming well positioned in South Korea’s markets, as well as one of its largest cryptocurrency exchanges, which is preparing a new blockchain platform through its subsidiary. These would all fit into Blockchain 3.0 descriptions.

Enterprise adoption

EOS has found itself being adopted by Neowiz Co, a leading games developer in South Korea who are now developing video games on EOS. The EOS network is pegged by Weiss Ratings Agency as one of the most innovative blockchain projects out there and is becoming increasingly favored by the gaming sector.

Orbs, an “Infrastructure-as-a-Service” (IaaS) platform from Israel, claims to be an improvement upon Ethereum. It uses the network’s best features while being faster, and includes a new transaction fee model among other interesting features.

This project is drawing a great deal of attention now with a strategic partnership in place with Ground X, a blockchain subsidiary of Kakao Corp, who also own one the world’s largest cryptocurrency exchanges, Upbit.

According to the Business Korea report, it is “highly likely” that Orbs will be collaborating with a blockchain payment project named Terra, a South Korean stablecoin project.

Additionally, Kakao is preparing to unveil the testnet for a blockchain platform developed by Ground X. “Clayton” is said to debut in October and is also in direct competition with Naver, South Korea’s largest internet content service company. Naver has produced the Link Chain platform, a payment and compensation method for numerous services including games, commerce, and content.

Blockchain enterprises in South Korea are receiving encouraging levels of support from the government as the nation seeks to formalize regulations and legislation for the industry. Despite being less in place than Malta, South Korea still a thought leader to other nations also seeking to enter the space.

 

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Crypto Startups, US Lawmakers Discuss Legislation

A new round of talks is taking place in Washington today between US financial companies and cryptocurrency startups entitled “Legislating Certainty for Cryptocurrencies” with ICOs as a major focus.

The sector representatives will meet with Washington lawmakers in order to further discuss Congressman Warren Davidson’s proposed bill set to pass through the House of Representatives this fall. Representatives of the industry invited to Capitol Hill for today’s roundtable are listed as Andreessen Horowitz, Circle, CME Group, Coin Center, CoinList, Harbor, Intercontinental Exchange, Kraken, Nasdaq, Ripple, Union Square Ventures and some others.

Davidson sits on The United States House Committee on Financial Services, which is responsible for overseeing the entire financial services industry, including the securities, insurance, banking, and housing industries. Congressman Davidson describes the meeting as design to offer a “light touch” to current ICO regulation before the new bill goes to US Congress later this year. He commented:

“I intend to lead legislation for initial coin offerings to clarify the role of regulators, protect consumers, address national security concerns, and facilitate a pro-growth environment for businesses to raise capital.”

Davidson had forewarned participants in a letter that discussing ICO overregulation would be the main theme among other issues, writing that “your input is critical to helping us pre-empt a heavy-handed regulatory approach that could stall innovation and kill the US ICO (Initial Coin Offering) market”.

Countries around the globe have taken quite differing legislative approaches to ICOs. The US, through the SEC, has always taken a “legislate first, business later, approach”, dissuading many overseas companies from entering the US crypto market. The EU has implemented the General Data Protection Regulation (GDPR) this year of which the main focus is an individual’s right to control what happens to their own data, which has implications for blockchain.

In South Korea, a ban on ICOs was put in place last year as a safeguard to crypto related fraud but the blockchain community is flourishing. Earlier this year, the South Korean government invested KRW 4.2 million (USD 3.75 million) into improving public services using blockchain applications for customs clearance, history of cattle, and simple property transaction.

US Republican Tom Emmer, who is pushing for more interaction between government and companies working with new technologies such as blockchain, recently commented on a new bill he hopes to get passed through the legislature:

“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth…”

Emmer, who is co-chair of the Congressional Blockchain Caucus, calls for a “hands off” regulatory approach to blockchain.

 

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