South Korea has one of the largest cryptocurrency markets in the world. Every class of people in the country is acquainted with the virtual currency, and the country has become a hotbed for cryptocurrency trading. It is estimated that the country has nearly one million registered daily traders in virtual currency. The environment in the country impacts the overall cryptocurrency market. If authorities take any action against trading platforms, it reflects in prices of virtual coins. Being the world’s no. 3 market in bitcoin trading after Japan and the U.S., the country is home to two of the top 15 digital currency exchanges, Bithumb and Coinone. The booming cryptocurrency market has attracted investors and local entrepreneurs. Many startups have started dealing in virtual currencies and blockchain technologies.
Determining the need to study new technologies as the country moves ahead in the field of information and communications, the South Korean city of Seoul decided to start its own cryptocurrency known as “S-Coin”. Park Won-soon, the Mayor of Seoul announced the plan last week. In addition, he announced the creation of funding to support blockchain technology and related startups. Another country Estonia has been trying to apply blockchain technology to almost all administrative processes of governments. Following its footsteps, Park stated, “The blockchain can be applied to all bureaucratic administrations in Seoul, such as the public transport system operated by Seoul City and the provision of youth allowance.”
Outlining the plans to utilize S-Coin, Park said that it could be used as a payment method for welfare programs funded by the city government. These programs include addressing environmental concerns such as saving water, gas, and electricity. The Mayor understands a need for change in laws that govern cryptocurrencies. The institutional and legal support in terms of bylaws are needed to create a virtual currency S-Coin. He also plans to boost the blockchain ecosystem. He opined that blockchain companies are not able to see the light of day due to various regulations. The technology is as progressed as other countries. He underlined the need to create clusters to allow blockchain companies to build up, startups to develop innovative technologies, and spread the technology around the world.
Commenting on the Korean Government’s regulatory policy on cryptocurrency, the Mayor stated that there was a lot of resistance after announcement of regulatory measures by the Ministry of Justice. The reaction made the government think about the regulatory measures. He outlined that it is the task of local government to create cases and models. If the government eases up few regulations, it will be easier to execute these models.
It seems difficult that the government would pave an easy way for cryptocurrency and blockchain. The country’s Financial Services Commission (FSC) issued a ban on ICOs in September 2017. The government asserted that the state does not guarantee the proper value of cryptocurrencies. Its unwillingness to support cryptocurrency and blockchain platform makes it difficult to execute the plan. In addition, the government planned to incur taxes on cryptocurrency transactions. Before this regulation, only commission fees were levied on trading virtual currencies. The plan would help in advancement of blockchain technology across the world, but there are major hurdles in the path that need to be overcome. The path seems tricky given its stance on cryptocurrencies and ICOs, but the Mayor and team need to take a lot of efforts to make it happen.