The government of South Korea has recently declared Busan as a “regulation-free zone” for blockchain technology. This move was being expected for a long time, as the government had announced it a while ago.
According to the government, the model is said to be inspired by Zug, in Switzerland. The Swiss town has created a similar model in which the companies are freer to innovate with the technology and have fewer barriers created by the government.
Busan is the second-largest city in South Korea and it will have several blockchain projects that will be focused on different areas such as finances, tourism, public safety, and others.
In order to implement the project, the government decided to lift eleven different regulations. It is expected that local and international investors will move over $25 million USD to the region within the next two years. Reports indicate that the core of the project will be based between the two “innovation districts” of the city, Dongsam and Munheyon.
Project Will Have Several Partners
Several companies have already announced that they will be a part of this new initiative. The BNK Busan Bank was one of them. The company is an exchange that will supervise blockchain management and is set to create a new stablecoin pegged to the local fiat currency.
Another company that is set to be a part of this initiative is Hyundai Pay. The company is said to be planning to support payment solutions that will be used in tourism. It is a subsidiary of Hyundai that was created in 2016 and it has recently started a partnership with the city of Busan in order to move there and use the platform on the town.
The largest holder of blockchain patents in the country, Coinplug, is also set to be a part of the initiative. The company is set to create an app that will allow the citizens of the city to film crimes and disasters and send the files to the authorities, so they can act quickly. A reward system will be created in the app to encourage people to use this system.
Finally, there is BP&Solution, a computer company based in the city. This company will develop a blockchain technology that will be related to fisheries.
Busan Will Not Be 100% Regulation-Free
Despite the claims that the city will be free from regulation, Busan will not be full without any kind of regulation at all. Some laws will still apply. For instance, Initial Coin Offerings, which are banned from the country, will not be allowed in Busan.
Cryptocurrencies will suffer more restrictions and will have very limited use as the country is not really so comfortable with them. Because of this, non-crypto projects can be expected to benefit more from the zone.
The whole project was explicitly not made to be crypto-related from the start. Despite some of the projects creating their own cryptos, they are to take a second place and let the blockchain shine.
Because of this, the so-called regulation-free zone should be more seen as a controlled experiment in which the companies get more freedom than an actual zone in which companies will be able to do as they please, taken that the local government is very suspicious of cryptos.
Busan was a great choice of city since it has a long history of being a center for the national financial world and innovation as well. With the current work in the local blockchain industry, Busan is certainly set to become one of the most important centers for the technology in South Korea.
The president of South Korea, Moon Jae-in, has recently promoting ideas of regulatory sandboxes in order to find out the best way to let the technology in the country be properly developed. Busan may be the main project, but several of these regulatory sandboxes have been approved so far. At the moment, Korea has over 80 of them.
With this effort, the government is making the right steps in order to bring more innovation and development for South Korea.