By Connor Hughes
With the current global climate, early March seems like an eternity ago, but it provided significant developments in the Korean crypto-space, with the passing of new legislation that clarifies the legal requirements for cryptocurrency companies to operate in the country.
The South Korean National Assembly’s announcement last week was the first step towards South Korean institutions embracing blockchain technology. The move is a clear signal that the government is open to blockchain, with many of the finer details to be decided in the coming months. This gives much-needed flexibility to incumbents in the Korean market to adapt to new rules without facing immediate action, but may also act as an entry barrier and leave newer entrants struggling to emerge.
Perhaps the most immediate concern for the Korean government is surrounding Anti Money Laundering. Much of the current focus has been on crypto exchanges, but attention is quickly extending to any business that engages in the provision of services related to digital assets (Virtual Asset Service Providers — VASPs). All businesses that do so will soon have to obtain a license from the Korean Internet Security Agency, and compliance with Know Your Customer (KYC) laws that already apply to other financial institutions such as the linking of virtual wallets and bank accounts, both of which must be in the holder’s full legal name.
Existing global projects face an interesting situation — Korea looks set to be a fast-growing hub for the world’s blockchain industry, but it could prove costly to them to open branches in the country and spend time ‘settling in’ and adapting to differences in business customs, for example.
Fantom’s Korean team, led by Kevin Kim, is in a great position to take advantage of the circumstances. The time already spent strengthening business relationships in the country will be an immense advantage when navigating the new regulation. The ability to draw on advice and practical help from a substantial network of contacts is essential to overcome hurdles quickly. We also expect institutions to embrace blockchain technology on a greater level now that the government is providing a legal framework for legitimate blockchain companies to separate themselves from the bad actors.
Much of the legislation will be helpful for the future development of our full-stack DeFi suite, Fantom Finance. Having a guideline for legislation that other countries are likely to reflect allows us to tailor development to work with potential regulation from the outset, rather than having to backtrack and pivot to accommodate regulation after the fact.
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Fantom Korea Update: A deeper look at the recent regulations was originally published in Fantom Foundation on Medium, where people are continuing the conversation by highlighting and responding to this story.
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