Support? or Oppose?
Korean blockchain and crypto industry in 2019.
It is a tug of war between two government departments in Korea.
2017 and 2018 was a very indecisive period for the Korean government, as they were not able to properly distinguish whether they were backing the blockchain and crypto industry, or blocking them.
1. The Hostile attitude towards to blockchain of Korean Government
On December 2018, One of the crucial government departments in Korea, a key player who is in charge of SMEs’ growing and development, Ministry of SMEs and Startups(aka MMS) officially announced a cancelation notice of venture business certifications. The main subject of cancelation was all related to blockchain and crypto affecting well-known top tier crypto exchange Upbit (Dunamu), Coiniz (Wave String) and Cofax (Streami).
This is a follow-up administration ordinance from MMS which was announced September last year, with this initial order aiming to exclude the sale and brokerage of cryptocurrencies transactions from venture companies in Korea. This means, in other words, that Korean blockchain and crypto related corporates including exchanges that are attracting worldwide attention are treated as illegal entertainment bars and gambling places by its own government.
After the cancelation was actioned by the government, some experts and legal professionals who belong to the National Assembly of Korea strongly criticized the behavior of the central government and its departments’ decisions. They also mentioned that this can be a possible matter for constitutional appeal.
Some from those blockchain and crypto related companies said,
“The reduction of benefits right now is a big burden for the company, but the fact that the “scarlet letter” that has been printed on the company brand image is the thing that we should really care about.
Officers from MMS of Korea disposed of the statements made by the blockchain companies, saying: “As the requirements for a venture business certification subject have changed, so the MMS’s behavior can be interpreted that the government could disqualify whoever cannot meet the conditions.”
Since then, the mother company of Upbit, Dunamu, filed an administrative suit, saying that they could not accept the decision to cancel the venture certification.
According to a telephone interview with Coindesk Korea on January 14, 2019, Dunam officially mentioned that “Although the exchange has contributed to the development of the blockchain industry, the enforcement ordinance has been revised to be treated like entertainment establishments and illegal gambling corporates. Based on this, I have filed an administrative suit against the disposition of canceling the company certification. Administrative litigation is the only way of expressing what we can do about canceling venture certification. “
2. The “Two-faced” Government: The encouragement of Korea Government towards to blockchain industry
Soon after MMS made this decision, in early March 2019, another two crucial government departments in Korea, Ministry of Science of ICT (MSICT) and Korea Internet & Security Agency(KISA) confirmed they have cooperated for a long time and finally announced that they will back the private-led initiative for the first time this year to create an early market for the blockchain industry which is the core technology of the 4th industrial revolution.
One could argue they have turned 180 degrees on their attitude towards the blockchain and crypto market from the comments they made three months ago. The project, led by a private company, including two of the well-known crypto exchanges Coinplugs and Upbit(Dunamu), which ironically was forfeited the venture business certification at that same time, 3 months ago.
According to the announcement of the MSICT AND KISA, Coinplug will assist government and related departments to develop DID (Digital ID) and education services about blockchain and crypto, whilst Dunamu will build and conduct a donation platform based on blockchain technology.
This kind of government action makes the blockchain and crypto industry in Korea more confused.
I am wondering how many of these existing blockchain projects and companies have voluntarily applied for the government scheme without enforcement from the government. It is quite obvious that Coinplug’s decision; transferring their “category of business” to others is just a temporary one to avoid more serious damage.
In short, the Korean government and its departments are still being very vague. They have a few blockchain experts and the figures who can truly understand the in-depth nature of the blockchain industry, but that is not enough, so this kind of two-faced situation keeps happening day in day out.
Korea has a very key role in the adoption and growth of crypto and blockchain around the world. The trading volume is still one of the highest and our exchanges are known as top-tier in the industry. Still, in this bear market, a lot of projects from all around the world are extremely eager to inroad into the Korea market. To give a simple example to back up this opinion, Bithumb and Upbit, dominate the overall market with a commanding 86 percent.
The conflicting decisions of the Korean Government make the market more chaotic. The nuance that they accept the technology more proactively, and the other attitude to block the capital and resources flowing into the blockchain industry, which one we should more focus on.
How will this play out in the future?