Cryptocurrencies in South Korea
A Haven of Technological Innovation
South Korea has always been an early adopter of technological innovation – be it social networks, video games, or micropayment transactions. It is one of the most technically advanced nations, which is not unsurprising for a country that is home to global brands Samsung, LG and Hyundai. According to 2016 gross domestic product (GDP) figures by Britain’s Foreign and Commonwealth Office, South Korea tops the Organization for Economic Cooperation and Development’s (OECD) 2011 PISA rankings for digital literacy among 16 participating nations, including Hong Kong. The country also boasts the world’s greatest broadband penetration worldwide. This explains why cryptocurrencies and their infrastructure, including ATMs, merchants, apps, blockchain technology and other digital assets are booming.
In the beginning, South Korea’s initial stance on Bitcoin and blockchain technology was to ban it altogether. At first, the country prohibited its citizens from anonymously trading cryptocurrencies. Government officials could not hold or trade crypto assets and participate in initial coin offerings (ICOs). Some argue that this ICO ban stymied the development of blockchain in the country especially in the private sector. However, South Korea has since affirmed that the bans and stringent rules were to deter scam ICOs from originating from the country and to protect its citizens from corrupt practices. There has since been lifting of the blanket ban on ICOs and Bitcoin now enjoys legal status as remittance method.
Celebrating Early Adopters
In July of 2018 South Korea’s financial regulator announced his intention to ease restrictions. This was at the same time that there was official recognition of cryptocurrency exchanges as legal entities. Predictably, Binance (the world’s largest cryptocurrency exchange) announced its plans to expand into South Korea. These milestones were followed by the local Financial Services Commission (FSC) announcing the creation of a dedicated cryptocurrency division tasked with overseeing the sector and protecting consumers.
A robust gaming industry has made South Korean comfortable with micropayments, electronic transfers and digital asset transactions. In 2001, online casual gaming was mostly free. The local gaming company Hangame averaged $30,000 per day in micro payments of 50 cents each. By the end of the year, the same company was earning $80,000 per day. Within three years, annual revenues had grown to a whopping $93 million.
Developing the Cryptocurrency Ecosystem
A unique development in South Korea is the creation of specialized cryptocurrency research centers. This is no doubt due to the popularity of Bitcoin, altcoins, and blockchain technology. The goal of these establishments is to provide Bitcoin and blockchain enthusiasts with information on understanding cryptocurrency ecosystems. Coinone, the country’s largest cryptocurrency exchange, has launched a similar initiative. It is utilizing it’s own research center that has the task of releasing weekly reports and analysis on the cryptocurrency market.
South Korea has established itself as a major cryptocurrency player, home to two of the world’s top 25 crypto exchanges Upbit and Bithumb sharing a combined trading volume of more than $200 million. The country has also effectively reshaped its stance regarding crypto activities, placing itself in a better position to become a major force for blockchain. According to Forbes, the country is looking beyond just cryptocurrencies, making significant strides in adopting blockchain technology.