South Korea is one of the fore runners when it comes to technology and its applications. The country enjoys a rich technological heritage with well-regulated and generous venture capital backing. Owing to this favorable set-up, South Korea has become the home for diverse tech startups that have gone on to become market giants across the globe. Even in the case of cryptocurrencies and Blockchain, all these observations are consistent. After achieving superior levels of expertise in digital assets and blockchain, the authorities are now planning to launch a national digital currency. While this move certainly is gutsy, let’s look into whether South Korea is actually prepared enough to handle it:
History of Cryptocurrencies:
When it came to cryptocurrencies, South Korea has always kept an open mind and has been liberal about the proceedings. Right from 2010, there has been liberal regulation of Bitcoin and startups based on the cryptocurrency evolved effortlessly. The transition from traditional finance to evolved Fintech happened with little friction. Even Public fund managers were able to incorporate Bitcoin indicating the kind of regard Bitcoin has been enjoying.
Out of one such instance, came the first ever Exchange traded fund (ETF) of Bitcoin across the world. While in USA, Winklevoss brothers are finding it difficult to get their ETF approved, Korea was able to launch it. The Korea Exchange, official exchange of South Korea would be hosting this ETF along with other products it offers.
The merchant adoption in the country is rising and is evident in the way the exchanges have launched adoption schemes. Since 2014, Coinplug has been building Bitcoin infrastructure in Korea with over 7,000 ATM machines. They have introduced okBitcard, which allows buying Bitcoins instantly over the counter. This facility is available at over 24,000 convenience stores.
Apart from Coinplug, Korbit has a very strong presence in Korea with over 10,000 ATM machines and 50 banking institutions. These banking institutions can receive remittances from bitcoin senders. The service provided by Korbit for these payments, ‘BitWire’, received good response.
Setting up the currency:
At 12th annual FinTech Demo Day in Seoul, the chairman of South Korea’s Financial Services Commission (FSC), Yim Jong-yong, announced his department’s plans to lay groundwork for spread of digital currency. The FSC did not reveal any details as to what form or technology the digital currency will use. The government and the local financial industry players will launch pilot projects this year with Blockchain. The work would involve setting up new National cryptocurrency on the framework of Blockchain.
The department is offering three trillion won ($2.65 Billion) in funding over the next three years, to financially support the development of the fintech sector in South Korea.