Embracing innovation has turned South Korea from an agrarian society into one of the most tech-saturated cultures on the planet.
In only sixty years, the country has gone from leading the world in rice production, to pioneering the latest semiconductors and becoming the number one country for smartphone ownership and internet usage.
Now, South Korea is at the forefront of crypto.
The country is the third-biggest bitcoin market globally (behind only Japan and the United States), and is leading the world in both the adoption and regulation of cryptoassets.
Western traders riding the bitcoin bull run of late 2017 will remember waking up to see South Korea pushing the price to new heights; with traders in the country paying a ‘kimchi premium’ of up to a staggering fifty percent to buy bitcoin in Korean Won.
This was the final crescendo of a wave of intense speculation. One that was driven by a unique set of circumstances, including gambling bans, a sluggish economy, and levels of youth unemployment so high that many looked to crypto as a once-in-a-lifetime moonshot to prosperity.
More critically perhaps, then as now, crypto also fitted neatly with the ethos of embracing new tech that drives South Korean society.
Samsung, for example, the company that started life as a grocery trader in 1938, has been one of the country’s leading crypto supporters. The tech firm first found success selling mining chips In 2018, then released a phone with encrypted storage in 2019. Not missing a beat, it has since started turning televisions into NFT stations for browsing, purchasing, and displaying digital art.
South Korean rivals have responded accordingly. Tech giant LG Electronics officially added blockchain and cryptocurrency as new business areas in 2022, and internet juggernaut NAVER is entering the NFT business through popular chat app LINE. Kakao Talk, the dominant local messenger app, also has its own blockchain project: Klaytn, which has secured the Bank of Korea's Central Bank Digital Currency (CBDC) project, and partnered with multiple other high-flyers, including Samsung and MetaMask Institutional developer ConsenSys.
As crypto has gained traction, South Korean authorities have toed a delicate line between loosening regulations in some areas to avoid stifling innovation, and tightening the reins in others to protect investors.
Indeed, South Korea has been so successful at this balancing act that they have set several global precedents on handling challenging aspects of the crypto ecosystem.
For example, authorities have introduced legislation that aims to protect traders from paying the price of security breaches, requiring exchanges such as Bithumb to update their terms of service to make them liable for losses, whether from hacks or internal error.
Yet at the same time, regulators have also cast off the reins almost completely — encouraging blockchain innovation by declaring areas like the port city of Busan a “regulation sandbox".
Most recently, the appointment of crypto-friendly president Yoon Suk-yeol marked a pivotal moment for the country. He promises to usher in a new dawn for crypto adoption by reversing the 2017 ban on initial coin offerings and easing the crypto tax burden. He has also pledged to provide legal protection for the industry by establishing what he calls the Basic Digital Asset Law.
No doubt accelerated by the collapse of local stablecoin project Terra Luna, this legislation is expected to go into effect by 2024. It will help regulate the full breadth of digital asset issuance, listing, and market activity, and steer the industry towards greater investor protection and integration with traditional finance.
As South Korean Qredo community member Daniel Kim suggests, this provides fertile ground for the adoption of institutional digital asset solutions such as Qredo:
"South Korea's crypto market is getting stricter to comply with FATF's Travel Rule regulations. As institutional procedures are in place, interest in crypto assets by large corporations and governments has increased, and individual investors have more knowledge and insight than they did in 2017. Qredo’s network, particularly its Travel Rule compliance capability, is significant for all of these institutions, governments, and individuals."
—Daniel Kim, South Korean community member
Looking ahead, we have big plans for this corner of the world; including listing the Qredo Token on top local exchanges, and rolling out our institutional-grade infrastructure where it is needed most.