South Korea’s Digital Assets: Policy Approach to Smart Regulation
With the advent of blockchain technology and digital assets, the global financial environment is transforming into a more accessible, transparent, fair and efficient system. This transformation will open up new use cases, open new markets and provide innovative paths for individuals and businesses to access and build a more comprehensive global financial system.
However, as is often the case with emerging technologies, it is difficult to get a complete picture and scope of this impact from a policy perspective, and it is even more difficult to predict future trends. This emergence means that new types of organizations are offering new services and products. This brings great benefits to the economy, but it can also bring new forms of risk. Therefore, the technical and economic characteristics of blockchain and digital assets require smart regulation.
Regulators and policy makers face the unique challenge of striking a delicate balance between facilitating innovation and ensuring adequate security measures to take full advantage of this technology.
K-POP: South Korea’s popularity for blockchain and digital assets
The APAC region has dominated the digital banking sector and has become a global leader in digital payment solutions. More specifically, South Korea has long adopted new technologies early and has quickly embraced new innovations and opportunities such as blockchain and digital assets. And it’s a vibrant market. The total market size of digital assets has grown to US $ 45.9 billion, and daily transactions on Korean exchanges have reached US $ 9.4 billion in BTC (13.6%), ETH (12.4%) and XRP (10.2%). bottom. The top three digital assets traded.
Due to this growing popularity, cryptocurrencies are in the limelight in South Korea, as policy makers tighten consumer protection regulations and better manage AML (anti-money laundering) risk, especially around exchanges. I am looking for it as a tool for. The first steps have been taken. In March 2020, the Korean Parliament passed an amendment to the Act on Reporting and Use of Certain Financial Transaction Information, which came into force a year later, extending licensing requirements to virtual asset service providers.
However, while the policy intent is sound, the wide range of implementations means that almost any entity that uses digital assets to provide a solution is within the scope of the regulation, even if it is not considered an exchange. increase. This will cause land companies to hesitate to participate in the digital asset movement, ultimately curbing innovation and triggering a chain reaction of backlash from crypto investors. Needless to say, additional regulatory reforms were in high demand and were a hot topic in the region’s recent presidential elections.
Digital asset policy framework
Ripple has long advocated clear and clear regulatory policies as a key driver for further expansion and global adoption of digital assets. We believe this is essential for a more economically inclusive future and a world without economic borders.
To support further innovation in South Korea, we recently partnered with Oxford Metrica, a leading UK-based advisory firm, and GBC Korea, a Seoul-based blockchain-based M & A platform, in South Korea. Digital assets and cryptography. “Blockchain and Digital Asset Policy Framework in South Korea(With Korean translation) provides South Korean policy makers and regulators with recommendations to further develop the blockchain outlook by establishing a smart regulatory framework, and financial institutions across the region. We encourage your participation.
This paper reviews a series of digital asset classifications across different jurisdictions and suggests recommendations for further developing the use of digital assets in South Korea. This too:
- Adopt digital asset classifications in line with global best practices – make a clear distinction between payment tokens, utility tokens and security tokens
- Implement a risk-sensitive digital asset regulation framework to provide sector certainty and drive innovation
- Fostering a digital asset innovation sandbox that enables market participants to test new innovative products, services, and business models with end users in a controlled environment under regulatory oversight.
- Promote public-private partnerships through lively dialogue between regulatory agencies and market participants
In addition, there are use cases for cross-border payments using RippleNet, a global blockchain-based payment network, and corresponding on-demand liquidity for immediate and low-cost cross-border payments using digital asset XRP. It also describes (ODL) solutions. Eliminates the need for costly upfront funding accounts. In addition, we will outline the use cases for M & A using GBC Korea’s GMAP platform.
The results are as follows.There is a lot of thirst for blockchain development
Oxford Metrica conducted a survey of CEOs or chairs of South Korea’s largest financial institutions to assess their willingness to develop blockchain technology at major Korean financial institutions. The survey found that there was considerable interest in further blockchain development.
The main findings of the survey are as follows.
- 100% of respondents were interested in adopting blockchain technology as part of their mainstream business and showed that they were actively pursuing it.
- When investigating the progress of respondents towards implementing the technology, 40% had already developed a proof of concept and 60% were in the pilot stage of implementation.
- As for the business areas pursued, 80% focused on payments and 20% focused on capital markets.
It is clear that a framework for virtual asset regulation in South Korea is needed. Our hope is that the proposed policy recommendations will provide industry, its markets, and consumers with legal clarity about the nature of blockchain and digital assets across the region. Each policy proposal, whether implemented individually or together, has the potential to successfully achieve its goal of facilitating innovation while ensuring adequate protection now and in the future. ..