The cryptocurrency ban in South Korea may prove to be ineffective for the Busan blockchain regulation-free zone, as per sources.

In 2018, the South Korean Ministry of Start-ups and SMEs invested 1 trillion KRW to grow their blockchain technology industry as part of their “Growth Through Innovation” initiative. Still, the place does not have enough companies as they are unable to release private assets on the ledgers that they are developing. Those assets are known as cryptocurrencies, which still remain banned in the country of South Korea, as per the local civil and commercial laws.

CRYPTOCURRENCY-ENABLED STARTUP FALTERS

According to the report by Korea IT Times on Wednesday, the recently chosen ‘blockchain regulation-free’ city of Busan is unlikely to prove effective because of the country’s strict regulations about cryptocurrencies and ICOs. 

As per the report, a blockchain start-up, OkayCoinCore’s screening was denied due to regulatory restrictions. The firm, despite having nothing to do with ICOs and crypto, was excluded by a selection committee. It had only created a digital asset-backed security, by integrating cryptography and tokenization, which would allow for a smooth flow across wallets while getting their transactions stored on a ledger automatically. 

OkayCoin ultimately seemed tofall short when it came to followingtheanti-crypto directive by Korean Financial Services Commission. As a result, one potentially promising company was shut down.

The Busan Metropolitan Government, which is beyond the blockchain exclusive zone, confirmed OkayCoin to be their project, which was going to commence by the end of 2019. Regarding regulations, the body said that they wouldlook throughthe propositionsabout cryptocurrencies which were offered by relevant ministriesagain, sayingthat they have no right or powerto change the mindsof anti-crypto lawmakers and regulators. The statement said:

“Busan should review the proposals when the relevant ministries give opinions on the special district participation such as acceptance or conditional acceptance. If the Korean Financial Services Commission keeps an unacceptable position for ‘the special regulation-free on cryptocurrency, the Ministry of SMEs and Startupscannot change it to acceptance.”

STUCK STARTUPS

As reported earlier on Blockchain Magazine, logistics, tourism, finance and public safety are the four main areas that are to be worked on in the Busan blockchain-regulation free zone.Almost 13 companies are already looking to open offices in this area, thanks to its low cost and tax requirements. Out of those, the Busan bank has already launched a crypto-enabled currency to increase the circulation on its private blockchain ledger, changing the term from ‘cryptocurrency’ to ‘crypto voucher’ due to the bank on launching one’s own digital currency by the Korean Financial Services Commission. 

BiPi & Solution, Busan Bank, Busan Techno Park (Food & Water), Korea Tour Pass (Tourism), Sarada (public safety), Hyundai Pay and Coinplugare a few selected companies for the Busan Blockchain Special Zone. The government of South Koreawishesto spends $1 trillion on the development of blockchain in the next few years.