The Blockchain boom of 2017-2018 in Korea is long over. However, as the buzz around Blockchain and cryptocurrencies died down in 2019-2020. The start of 2021 saw a significant boom which took the price of Bitcoin and many other cryptocurrencies to an all-time high. Now in 2023, there have been many exciting developments regarding Blockchain in Korea. Before we look ahead, we need to understand why Korea was such a hotbed for cryptocurrencies in the first place and why the Korean government has embraced Blockchain technologies compared to other countries. First, we will go into a complete breakdown regarding Blockchain in Korea leading up to 2021 (2017-2020). Then move on to plans in 2023 and beyond. 

The 2017 Cryptocurrency Boom in Korea Explained

Not many people know about Korea because Koreans are not allowed to gamble in Korea. Therefore Koreans are not allowed to enter half a dozen casinos around Seoul. There is only one location to the far east of Seoul where Koreans are legally allowed to gamble. The Korean government made it difficult for Koreans to gamble their money away. However, foreigners in Korea welcome gambling. Remember this as we see why Koreans were so fascinated with cryptocurrency in 2017.

Leading up to 2017, there was very little in terms of investment where the average Korean could make large profits quickly. Add this to the rise in youth unemployment and a slow economy; many Koreans are looking for a way out of their struggle. Furthermore, as Koreans started to notice the rise of Bitcoin in the 4th quarter of 2017, many started to invest without knowing the technology behind Bitcoin. They knew the price was rising and needed to get in before it was too late. Therefore it is not shocking to hear that 30-40% of working men in Korea have invested in cryptocurrencies. However, men were not alone; almost everyone, from grandmas to college women, invested in cryptocurrency. 

Koreans Love Crypto

Over 94% of Koreans over 13 use the social media app KakaoTalk daily. In addition, while Google has gained ground, Naver remains the #1 search engine in South Korea. This shows that Koreans prefer domestic platforms over foreign platforms as they cater to Korean consumers. This is why Zepetto, a blockchain-based game, outperforms the global hit Roblox in Korea. Zepetto has 22 million monthly users, with many earning a living as content creators on the platform.

The generation today all grew up with smartphones. They are considered the mobile generation and familiar with the latest technology and trends. They are eager and passionate about the next big tech trend, so South Korea has so much support for NFTs, GameFi, and Web3.

The Rise of Altcoins in South Korea

Korea quickly became one of the world’s largest markets for Bitcoin and Ethereum, the top 2 cryptocurrencies. Furthermore, some top trending topics on Korean social media were altcoins such as Litecoin, Ripple, EOS, and Monero. It got so crazy that Koreans were paying a premium for cryptocurrencies compared to the rest of the world. This premium was famously called “The Kimchi Premium.” 

This was also the time of the ICO boom in Korea. Many projects were able to raise millions of dollars in a short amount of time. Many of these projects JUST had an idea and a quickly drawn-up whitepaper. Soon many Korean companies were quickly looking to launch a “Blockchain” startup or create one. Therefore, this led to many new “Blockchain” companies coming up left and right. These companies were launching coin after coin, and the Korean public was eating them up. This led to South Koreans getting involved in 33% of all cryptocurrency trading, despite having less than 1% of the world’s population. One of the main reasons for this was that Korean cryptocurrency exchanges had no limits for individuals to purchase cryptocurrency. This would soon change.

The Korean Government Cracks Down on Cryptocurrencies

The Korean government stepped into a crackdown on cryptocurrencies as the boom was at a fever pitch. Remember early on when I mentioned how Koreans could not gamble in Korea? This was the Korean government’s way of “protecting” its citizens. Therefore the Korean government looked at cryptocurrencies as unregulated gambling outlets. In addition, in September of 2017, the Korean government strongly pushed against ICOs in Korea. Furthermore, in December of 2017, they cracked down on anonymous trading accounts on Korean cryptocurrency exchanges. Add this to the drop in price starting in early 2018, and the Boom was over just like that.

The 2018-2019 Mini Blockchain Boom in Korea Explained

The Korean government has always been against cryptocurrencies. However, they are intrigued by Blockchain technology. Furthermore, they are interested in how Blockchain technology could bring service platforms to help everyday Koreans. Therefore, Blockchain projects in Korea like Ground X and ICON have started to cooperate with the Korean government to develop Blockchain projects for the public sector jointly. In addition, Seoul’s late mayor Park Won-soon revealed his 5-year $150 million plan to turn Seoul into a Blockchain hub. Furthermore, the governor of Jeju Island created an economic zone to nurture Blockchain projects. It was very clear that in regard to Blockchain technology, the Korean government was willing to support it. 

South Korea Passes First Laws Regarding Cryptocurrency in 2020

The South Korean National Assembly passed a comprehensive cryptocurrency law in 2020. This will be used as the framework for future regulations and is a great step toward legalizing cryptocurrencies in Korea. The vote was unanimous as many assembly members supported embracing this new innovative technology. The assembly passed an amendment to Korea’s financial regulators to develop rules around anti-money laundering and regulate the cryptocurrency industry. Therefore, this first law is a great step for the Korean Blockchain ecosystem. Now Blockchain startups and exchanges can transition into the law’s new regulations. In addition, because of the impact of the coronavirus on Korea’s economy, it seems Korean officials are doing their best to promote innovation around tech to help boost the economy moving forward.

The Support of Blockchain Technology by the Korean government

The South Korean government plans to invest over $48 billion in Blockchain and other 4th Industrial revolution technologies by 2025. South Korean President Moon Jae-in has been very supportive of Blockchain technologies. He aims to use these new technologies to create over half a million jobs across Blockchain, AI, 5G networks, and Big Data.

“The fourth industrial revolution and digital civilization are the future of humanity that has already begun. The national development strategy to advance in the trend is the Korean version of the new deal. It is possible to jump from the older economy to the leading economy.” Said South Korean President Moon Jae-in.

Korea loves technology, and Blockchain is the technology of the future. The Korean government understands this. Furthermore, there is a large potential for mass adoption of Blockchain in industries like health, trading, IP rights, logistics, supply chain, real estate, and finance. Therefore they have made great efforts in Blockchain education to train future Korean entrepreneurs in the Blockchain industry. The Seoul Metropolitan government has also supported Korea Blockchain Week, the biggest Blockchain conference in Korea. Seoul is leading the way as they are looking to incorporate Blockchain technology into its infrastructure. 

The Blockchain Technology Validation Support in 2020

The Ministry of Science and ICT and the Ministry of Information and Communication Industry Promotion launched their pilot program in 2020 called Blockchain Technology Validation Support 2020. They selected 9 Blockchain startups in Korea and gave them $360,000 in funding. The Korean Blockchain startups were judged based on these key factors:

• Current performance
• Potential for future performance
• Feasibility of the technology
• Solid business plan
• Expected results
• Job creation potential
• Must offer services that can create economic and social value through Blockchain technology

The 2nd Cryptocurrency Wave in 2021

Cryptocurrency fever is back in South Korea due to the rise in almost all cryptocurrencies since 2021. The two top cryptocurrencies (Upbit & Bithumb) in South Korea saw their user count increase by over 2 million this year. Add this to the fact that there is real concern among Koreans about a possible recession due to the impact of COVID-19. Most users are in their 20s and 30s, as the young generation in Korea has found it very difficult to invest in real estate, find high-paying jobs, and keep up with the high cost of living. However, in 2021, the Ministry of Economy and Finance stated that those that have invested in cryptocurrency and have profited over 2.5 million won ($2,237) would need to pay a 20% tax.

Crackdown on Cryptocurrency Exchanges in 2021

South Korea has over 200 cryptocurrency exchanges. However, a vast majority of them are finding it hard to meet the conditions set by the Korean government regarding regulatory approval. Many have not obtained a business license as a legal trading platform. To get the license, cryptocurrency exchanges in Korea must partner with local banks to open real-name bank accounts for users. Many Korean banks hesitate to partner with cryptocurrency exchanges due to fears of money laundering through digital currencies. The deadline to meet these regulatory guidelines has been set for September 24th, 2021. Only a few cryptocurrency exchanges in Korea meet the requirements, such as Upbit, Bithumb, Korbit, and Coinone. These top cryptocurrency exchanges in Korea have partnered with local banks such as Shinhan Bank, Nonghyup Bank, and K-Bank.

Cryptocurrency Regulations in Korea

The Korea Blockchain Enterprise Promotion Association has been tasked to create these regulations, but nothing has come out. Jeju is a potential place for being a special Blockchain region in Korea. Korean Blockchain startups can run their Blockchain services and technologies in Jeju. Cities like Gwangju also want to become the Crypto-valley district. So it seems it is not a matter of if but when it comes to cryptocurrency regulation. Once cryptocurrency regulations are set in Korea, there could be another crypto boom in Korea.

The Korean government banned ICOs in late 2017. However, there was never a ban on cryptocurrency.  Data from Korea’s Financial Services Commission (FSC) shows over 6 million active traders in cryptocurrency in South Korea in 2022. This puts South Korea’s digital asset market cap at over $45 billion. This makes South Korea the 6th largest country in the world regarding cryptocurrency ownership.

In 2021 saw new licensing laws that shut down many crypto exchanges in South Korea. Only a few are left, with Upbit and Bithumb being a few of them. However, there is hope that newly elected South Korean President Yoon Suk-yeol will introduce more positive regulations regarding crypto. Yoon Suk-yeol even made an NFT to raise funds for his presidential run.

Korean Government Agencies Supporting Blockchain Technology

• Ministry of Science and Technology (ICT) – Will invest over $380 million over six years (2021-2026) into Blockchain Research and Development. They want to innovate public services such as facial recognition, tracking, and mobile personal identification using AI and Blockchain. In 2021, they granted ICONLOOP permission to test its Decentralized Identity (DID) technology on mobile driver’s licenses to prevent forgery and protect personal data. 
• The Korea Internet Security Agency (KISA) – Supports Blockchain-related projects through its $9 million Fund. Therefore, the maximum funding per project is $1.2 million. In addition, they worked with the Ministry of Science and Technology to launch pilot Blockchain projects in March 2020. They introduced a Blockchain-based decentralized identity (DID app) for their employees in 2021. 
• Defense Acquisition Program Administration (DAPA) – Will use Blockchain technology to bid on defense contracts digitally and to log the process of applying for and granting funding.
• Korea Customs Service (KCS) – Launched the “Fourth Industrial Revolution and Smart Customs” project to introduce AI, the Blockchain, and Big Data to back up Customs processes. 
• National IT Industry Promotion Agency (NIPA) – A government agency that offers programs to nurture Blockchain companies. In addition, they have a $5 million fund for Blockchain enterprises and startups.

Additional Government Agencies that Support Blockchain in Korea

• Korea Financial Telecommunications and Clearings Institute (KFTC) oversees payment settlements. Furthermore, it aims to introduce its Blockchain-enabled mobile ID solution.
• The Korea Post – Will build a Blockchain-powered payment method incorporated into its postal service by partnering with Korean Blockchain company Coinplug and global IT company NHN. 
• Presidential Committee on the Fourth Industrial Revolution (PCFIR) – The PCFIR was set up in 2017 to advise on new technologies, such as Blockchain policies, and help lay the groundwork for related new industries and services. They have stated that the Korean government should consider bringing in a licensing scheme or guidance for cryptocurrency exchanges in Korea.
• Seoul Blockchain Support Center – A 2,014 square center that will lease office spaces for Blockchain startups. In addition, they offer customized accelerator services for Blockchain companies. 
• The Korean Financial Services Commission (FSC) – The FSC has partnered with the Seoul Metropolitan Government to invest $16 million in training digital finance experts for four years. The grant ensures educational opportunities for the next generation of fintech professionals. Some fields include big data, cloud, and Blockchain.

Blockchain Projects for Government Agencies and Administrations in Korea

• The National Police Agency – Has partnered with the Korea Road Traffic Authority to create a platform for Blockchain-based digital evidence management. So far, one million South Koreans are now using Blockchain-powered digital driver licenses. In addition, the legally recognized ID solution can be used for ID requirements for convenience stores and retail chains that sell alcohol or cigarettes. Users must show their licenses via a barcode or QR code on the app.
• The Rural Development Administration – A platform for Blockchain-based crop production and logistics management.
• Ministry of Food and Drug Safety – A Blockchain-based welfare benefit management platform. They already have set up a national HACCP platform by using Blockchain technology. In addition, they established an imported food data management platform in 2020.
• Gangwon Provincial Government – A Blockchain-based chronic disease management platform.
• South Gyeongsang Province – A Blockchain-based platform for self-driving reliability enhancement in Sejong City.
• Korea Expressway Corporation – A platform for Blockchain-based toll payment.
• Military Manpower Administration – Will adopt a new biometric ID and authentication solution designed by Raonsesure, a top South Korean ICT security software company.

Corporations embracing Blockchain in Korea

Corporations in Korea have always embraced new technologies. One of these technologies is Blockchain. Kakao, the top mobile platform in Korea, started Ground X, focusing strictly on Blockchain to create a scalable blockchain platform to help with mass adoption. This opened the door for new and innovative blockchain startups to work with Kakao and take advantage of their infrastructure. 

Ground X is the creator of Klaytn, an enterprise blockchain platform. Its modular network architecture is designed to enable businesses to easily customize and operate their service-oriented blockchains built atop Klaytn architecture.

There is still pressure from the old generation in South Korea to get stable, secure jobs with big conglomerates like Samsung, LG, and Hyundai.  However, like most corporations, they can’t adopt new technologies as quickly as startups. While many Koreans still have a lot of fear about starting their own business, especially a startup. Working with new and trendy technologies like Blockchain could be a gateway for more Korean entrepreneurs to enter the startup scene since Korea is always looking for the next tech wave. Therefore there will always be an opportunity to join or start new and disruptive startups.

List of Korean Corporations Utilizing Blockchain Technology

• LG U+ – Will bring a new Blockchain-based cross-border payment system. In addition, they have collaborated with mobile carriers in Japan and Taiwan. They are also launching a Blockchain-based mobile phone insurance claims service to process pay-outs without submitting paper documents. 
• LG CNS – Looking to introduce several Blockchain projects through its Blockchain platform Monachain. In addition, they partnered with Shinhan Bank to develop and pilot a Blockchain-based digital currency platform. 
• Kakao – Created Klaytn, a global public Blockchain platform developed by Ground X (their Blockchain subsidiary). Ground X also stores and verifies unlisted investments as nonfungible tokens (NFTs) on its public blockchain. 
• Naver – Naver plans to add Bitcoin to its payment service, Naver Pay and Line Pay, in Japan and the United States. 
• SK Telecom – Will develop a Blockchain-based mobile identification solution. In addition, they launched a Blockchain-powered wallet for storing national documents in a government-led digitalization push. 
• KT – Will integrate Blockchain technology with small-scale power transaction mediation, automated overseas roaming settlement, and point management systems. 
• Samsung Electronics – Will create a user-friendly Blockchain environment for users to use Blockchain apps easily through the Samsung Galaxy S10 and Note 10. In addition, Samsung Electronics plans to expand its Blockchain services to include health and identity authentication. The S20, S20+, and S20 Ultra also support Bitcoin and other cryptocurrencies. They also created a secure processor to protect the user’s PIN, password, and Blockchain private keys. 

Additional Korean Corporations Utilizing Blockchain Technology

• Samsung SDS – Will work with the Seoul Metropolitan Government on establishing an Information Strategy Plan (ISP) for innovation in building Blockchain technology for the city of Seoul. In addition, they allied with Syniverse (a communications solutions company) to develop a mobile payment platform that combines its Blockchain platform Nexledger and Synverse’s Blockchain solution Universal Commerce. 
• Hyundai BS&C – Developed enterprise Blockchain solutions. Furthermore, these solutions will integrate with the IoT ecosystem in Korea. 
• Union Mobile – Launched its Blockchain project called ELYNET. It uses Blockchain technology to make telecommunications more efficient for users who use a single carrier for telecom service. In addition, users can use data communication services without roaming fees and contracts.
• Korea Electric Power Corporation – Signed a contract with two power suppliers in Korea to establish a Blockchain-powered system for transacting renewable energy certificates.

List of Korean Banks Utilizing Blockchain Technology

• KEB Hana Bank – They have partnered with Korea University to foster Blockchain-based technology, such as Blockchain-based data sharing and the development of Blockchain-based financial services and products. In addition, KEB Hana Bank entered into a deal with the Korea Expressway Corporation, a government-aided highway firm, to introduce a Blockchain-powered toll payment platform throughout the country’s highways.
• Woori Bank – Working with Ground X in developing Blockchain financial services. They are currently looking into introducing cryptocurrency services. For example, they plan to convert real estate funds into digital assets, selling and distributing them to investors without additional intermediaries. 
• Shinhan Bank – Shinhan is the largest bank in South Korea, with total group assets of $482 billion. They will implement Blockchain to speed up the loan approach. In addition, they have built a pilot platform for a potential South Korean central bank digital currency (CBDC) with assistance from LG CNS.

Additional Banks…

• KB Kookmin Bank – KB Kookmin is the second-largest bank in South Korea, with total assets of $474 billion. They applied for a patent in early 2020 for several crypto services such as trading, asset management, financial reporting, consulting, advisory, and custody. In addition, KB Kookmin Bank signed an agreement with Hashed, Haeshi Labs, and Cumberland Korea to develop its crypto services further.
• Bank of Korea – Bank of Korea has already finished virtual pilot testing for its central bank digital currency (CBDC). It will be subject to central bank regulation as a fiat currency.
• Nonghyup Bank – They have started to use Blockchain technology to authenticate the identity of their employees. It is a distributed ID Blockchain driven by an ID card system. It was created by partnering with SK Telecom. They are working on a cryptocurrency custody service to allow the bank to store and manage customers’ cryptocurrencies. They have already integrated their smart banking app with the government’s Blockchain electronic certificate solution.

Cryptocurrency Regulation in Korea (The Wild Wild East)

Regulations regarding cryptocurrencies are in a state of limbo at the moment. The National Assembly in Korea has proposed many cryptocurrency bills. Furthermore, many of these bills cover licensing requirements for cryptocurrency businesses in Korea. These requirements deal with anti-money laundering requirements, consumer protection, cybersecurity requirements for cryptocurrency exchanges in Korea, and compensation for consumer losses. Therefore, with how slow the Korean government runs, no one knows when these bills will be enacted into law in Korea. 

In late 2019, South Korea’s National Assembly national policy committee passed a bill to provide a legal basis for cryptocurrency in Korea. It was to bring regulatory clarity and transparency to the cryptocurrency market in Korea. The judiciary committee has not approved the bill. Therefore with so much uncertainty, below are a few reasons why cryptocurrency regulation in Korea is very clouded even now in 2021. 

Companies must complete a Virtual Asset Service Provider application to run Cryptocurrency exchanges in South Korea in 2023. This is due to an amended law that was enacted in September 2021. It is estimated that most of the crypto exchanges in Korea shut down after September 24th, 2021.

Current Regulation of Cryptocurrency in Korea

• No existing regulatory regime or statute specifically regulates cryptocurrencies in Korea. 
• The taxation of cryptocurrency is in development. 
• There is no specific law that prohibits the registration of cryptocurrency-related investment funds.
• Because the Korean government has stated that cryptocurrencies are not financial investment products, in addition, there are no licensing requirements for investment advisors on cryptocurrency investments. 
• There are no laws and regulations on mining cryptocurrencies in Korea. 
• There are no explicit border restrictions or obligations to declare cryptocurrency holdings. 
• There are no reporting requirements for overseas cryptocurrency payments to any Korean regulatory agency. 
• Under the current law in South Korea, the Korean government imposes a 20% tax on profits.

List of Promising Blockchain Projects in Korea

Since 2017, hundreds of Blockchain startups have sprung up in Korea. Many have failed; however, a few still remain and look promising moving forward. In addition, for a full breakdown, check out our article on the top Blockchain startups in Korea.

• ICON – The ICON Foundation oversees the ICON project’s core activities, including promoting and developing the ICON protocol. They recently partnered with Korea’s largest job-search platform called, SaraminHR. They will launch new features to prevent job application fraud by using ICONLOOP’s decentralized ID technology. 
• Medibloc – A decentralized healthcare information ecosystem built on Blockchain Technology for patients, healthcare providers, and researchers. 
• Blocko – A Blockchain firm in Korea that works on enterprise applications such as building business-focused Blockchain services.
• Haechi Labs – Top Blockchain Audit experts.

List of Cryptocurrency Exchanges in Korea

• Upbit
• Bithumb
• Korbit
• Coinone
• GOPAX

For a full breakdown, please check out our article on the top cryptocurrency exchanges in Korea.

South Korea’s Smart Cities Sejong and Seongnam Embrace Blockchain Technology

The city of Sejong in South Korea is a “Smart City: which they have been developing for a few years. It is the testing ground for a few technologies like 5G and self-driving cars. They will establish a blockchain-based identity verification platform for self-driving vehicles. South Korea’s Ministry of Science and ICT and Korea’s Internet & Security Agency will lead the identity management and verification platform development. Blockchain technology will increase the credibility of data. It will do this by strengthening the security of information shared by cars and control towers. Sejong will play a vital role in the future implementation of Blockchain technologies.

Seongnam, a major city in South Korea, will expand its already strong Blockchain-powered payment program. They plan to issue new digital gift certificates. They will use the Chak app, built by the Korea Minting and Security Printing Corporation (KOMSCO). These digital gift certificates will make it easier for the elderly and middle-aged residents to utilize the city’s existing Blockchain technology. It will also help make payments without the risk of human-to-human contact during COVID-19. These certificates can be used in over 45,000 card merchant locations across the city.

Blockchain in Korea – FAQ

The Korean government, banks, corporations, and startups know Blockchain will someday revolutionize many industries. Blockchain adoption continues to be the top hurdle. Therefore with such a new technology, it will take time for innovative entrepreneurs to take full advantage of Blockchain technology. 

1. Will the Bank of Korea Launch a Central Bank Digital Currency (CBDC)?

The Bank of Korea is already doing pilot tests to see whether its CBCD can be saved in a digital wallet for electronic payments and money transfers and used as a substitute for bank deposits and payment methods for buying goods and series. 

2. Blockchain in Social Media.

There are many problems that social media platforms have not been able to solve. This includes privacy violations, data control, and fair distribution. Will a Korean Blockchain startup be able to create a revolutionary Blockchain Social Media platform? Koreans have shown love in the past for projects like Steemit. Furthermore, many young Koreans dream about becoming the next big social media star.

3. Which Korean bank will adopt Blockchain technology for traditional everyday banking operations?

Some of the top contenders include Shinhan Bank, Hana Bank, and Woori Bank. The Korean bank that can incorporate Blockchain technology will be able to lead the way in innovation in the banking industry. A banking industry that is already ahead of most of the world. 

4. When will Seoul launch its S-Coin?

Seoul has already announced its Blockchain points system, where Seoul residents will get S-Coins for the use of public services. Therefore, some public services could be paying taxes, participating in public opinion polls, and volunteering. Furthermore, the public can redeem their coins for rewards. This should be interesting to see implemented. 

5. The Game Rating and Administration Committee (GRAC)

The GRAC has not given a rating to a Blockchain game in Korea. This will hurt the Blockchain gaming industry in Korea. This is because games that do not receive a GRAC rating cannot be distributed in Korea. It will be interesting to see how they embrace Blockchain gaming moving forward. 

6. AI startups in Korea will incorporate Blockchain and its ledger.

The distributed ledger will record all the decisions, data, and variables made by the A.I. A Korean startup will lead the way in migrating this technology to all companies in Korea. 

7. Corporations and Universities in Korea will add Blockchain training programs for developing and managing Blockchain networks and protocols.

Yonsei University has partnered with Pohang University of Science and Technology (Postech). Together they will develop an entire Blockchain campus with its cryptocurrency. In addition, KyungHee University Medical Center will team up with Hong Kong Blockchain startup Sendsquare. They have begun analyzing nine years’ worth of diabetes clinical data previously collected by the center. This project will take around six months to complete. The initial objective is to analyze the data working on anonymizing it. Then they will finally implement the data onto a registry recorded on an unspecified blockchain platform.