South Korea Advances CBDC Pilot Project: Jeju, Busan, and Incheon Selected as Test Regions

South Korea is advancing its efforts to implement a central bank digital currency (CBDC) by narrowing down three potential regions for a pilot project. The Bank of Korea has identified Jeju, Busan, and Incheon as candidates for the private target CBDC test bed, excluding the country’s capital, Seoul, according to a report from a local South Korean media outlet on July 31, 2023.

The pilot project aims to explore the issuance and distribution of the CBDC, and the Bank of Korea plans to select one of the aforementioned regions for experimentation. The process will include testing payments and distribution at a public level and securing franchises that can accept payments via CBDC. An official at the bank stated, “The CBDC electronic wallet app will allow not only local residents but also many civilians, such as tourists to [partake].”

The regional closed tests of the CBDC will be similar to the current local currency scheme in place in various regions of South Korea. This local currency scheme was introduced during the COVID-19 pandemic as a basic income and relief payment solution. Jeju, Busan, and Incheon currently issue and distribute their local currencies, known as “Tamranjeon,” “Dongbaekjeon,” and “Incheon e-Eum,” respectively.

An official from a commercial bank in Korea reported that the choice was greatly inclined to Jeju, which has the second-largest population, as the number of eligible citizens in Busan is “so large that the Bank of Korea is burdened in many ways.”

The CBDC initiative in South Korea has been part of a broader exploration in recent years, with the country working on the project since at least 2020. Multiple banks in South Korea have also released information that they are conducting research on stablecoins as CBDC alternatives for efficiency purposes.

The local currency scheme has fewer technical barriers to overcome compared to CBDCs, according to the report. The pilot project’s success could pave the way for a more comprehensive implementation of CBDCs in South Korea, aligning with global trends in digital currency development.

Previously, South Korean electronics giant Samsung has joined forces with the Bank of Korea to cooperate on new CBDC research, including offline CBDC payment technology. This collaboration aims to enhance payment security and explore innovative solutions for digital currency utilization.

The South Korean CBDC pilot project represents a significant step in the country’s digital currency evolution and reflects the growing interest in CBDCs worldwide. 

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City of Busan Signs MoU with OKX’s Investment Arm to Spur Blockchain Growth

The City of Busan in South Korea has signed a Memorandum of Understanding (MoU) with OKX Blockdream Ventures, the investment arm of crypto exchange OKX, to enhance its blockchain sector. 

Per the announcement:

“As part of the agreement, the City of Busan will encourage investors to increase their investments in the Busan blockchain sector. In addition, the City of Busan will supply the necessary resources to attract large amounts of foreign capital for blockchain sector development.”

Therefore, OKX Blockdream Ventures will propel Busan City’s blockchain industry by recruiting top local talent and attracting global ones. Furthermore, it will provide marketing and media solutions.

 

Based on OKX Blockdream Ventures’ objective of propelling cutting-edge blockchain innovations, it seeks to boost Busan’s local capabilities in this sector.

 

Dora Yue, the founder of OKX Blockdream Ventures, pointed out:

“Through our industry-leading position, we hope to invest in promising and innovative blockchain projects in South Korea and actively promote the developments of the local blockchain industry.”

Through the strategic partnership, Busan will also attain long-term structural value. Heong-Joon Park, Busan’s mayor, added:

“We welcome VCs onboard in Busan and are expecting much from our future collaboration. We appreciate you actively participating in building Busan’s blockchain ecosystem. Together, we will help to make Busan a blockchain-specialized city.”

Busan has been making collaborations with different crypto exchanges aimed at boosting the digital asset space in the city. 

 

For instance, it signed a business deal with  FTX to support the establishment of its own exchange called Busan Digital Asset Exchange in August, Blockchain.News reported

 

As a result, the City of Busan would become a cryptocurrency center that would attract global attention based on a booming digital asset ecosystem. Furthermore, blockchain-specific education would be promoted. 

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S. Korean Regulators Oppose Busan’s Regulatory Measures for Attracting Foreign Crypto Exchanges

South Korean financial authorities expressed their opposite stance against Busan City to provide special regulatory support for partners to establish digital asset exchanges, local media outlet Money Today reported Thursday.

The Financial Intelligence Unit (FIU) under the Financial Services Commission of South Korea said judicial risks, investor risks and money laundering risks exist in cooperation with foreign cryptocurrency exchanges that will cause reverse discrimination against local cryptocurrency exchanges in the country.

 “If Busan City unreasonably rushes to establish a digital asset exchange, it may be criticized for saying that the referee (government) acts as the player (operator) before the disciplinary system advises.

On Aug. 26, the South Korean city of Busan signed a memorandum of understanding (MoU) with Binance, the world’s largest cryptocurrency exchange by trading volume, which will help the local government to establish its own exchange or the Busan digital asset exchange.

Busan city government also signed a memorandum of understanding (MOU) with FTX on August 30 and Huobi Global on September 14, agreeing to cooperate in establishing digital asset exchange. The city of Busan has pledged to provide administrative support for these overseas exchanges to enter South Korea.

However, South Korean financial authorities warned that Chinese coin exchanges such as Binance or Huobi Global are currently under investigation by foreign regulators, such as U.S. regulators the Securities and Exchange Commission (SEC) is currently investigating whether Binance violated securities laws.

The financial regulators pointed out that South Korea will be criticized for cooperation projects with such “flawed companies”. 

All three exchanges named are headquartered in the famous tax havens of Malta and the Bahamas; if these exchanges first operate in South Korea or establish a joint exchange with Busan City, there will be a high risk of money laundering.

The administration is concerned there may have a possibility that Chinese coin exchanges would invade the business field of South Korean exchanges if securities token trading through South Korean exchanges is allowed.

South Korean crypto exchange Coredax also objected to the local city government decision, saying it would hinder the development of crypto assets in the country and deepen foreign dependence.

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FTX and Busan Reaches Deal to Accelerate Blockchain Businesses

The South Korean city of Busan and FTX cryptocurrency exchange has signed a business deal to support the establishment of Busan Digital Asset Exchange.

According to the agreement statement, FTX will help the South Korean city build its own exchange called the Busan Digital Asset Exchange and provide it with technical and infrastructure support.

Despite the adverse events surrounding the cryptocurrency ecosystem that has seen the closure of several crypto companies, FTX continues to stand at a high level and the transactions signed to continue to appreciate the public profile of the blockchain industry.

Through this cooperation, the development of Busan’s cryptocurrency ecosystem will be promoted, making it a cryptocurrency centre of global attention.

In addition, the two parties will jointly promote blockchain-specific education in cooperation with universities in the Busan area and various projects to supervise the free zone using the Busan blockchain.

And assisted in organizing the three-day “Blockchain Week” scheduled to be held in Busan from October 27th this year and participating in the three-day “Blockchain Week” held in Busan BEXCO.

Mayor Park Hyung-jun said he would spare no effort to make Busan a blockchain hub and added that: “With this agreement, we will help establish the Busan Digital Asset Exchange and secure a new growth engine for the local economy.”

Prior to this, the South Korean city of Busan announced that it would sign a commercial agreement with Binance on the establishment of the Busan Digital Asset Exchange to build a cooperation system.

On August 27, Yong-beom Kim, former first deputy minister of the Ministry of Planning and Finance of South Korea, will join Hashed Open Research, a blockchain, and digital technology research institute, as CEO.

Samsung Securities, Mirae Asset Securities, and five other giant brokerage companies have applied for preliminary approval to operate a crypto exchange within the first half of 2023.

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South Korea’s Telecoms Giant to Launch Online Mall Powered by Busan’s Crypto

KT Corporation is launching an online mall dubbed Dongbaek Mall. The Mall will adopt Busan City’s blockchain-based digital currency, Dongbaekjeon as its primary medium of exchange, according to reports on November 26, 2020. Dongbaekjeom Use Case Extends KT Corp (formerly Korea Telecom), South Korea’s first and largest telecommunications company, has announced plans to launch an

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