- Ground X, the blockchain division of South Korean internet behemoth Kakao Corp., is in the news today after being chosen to conduct testing for the Bank of Korea’s digital currency
- Authorities recently imposed strict regulations on crypto-businesses and compelled compliance
- The country’s plans to test the circulation of a digital won were first revealed by the central bank in February
Ground X, the blockchain branch of South Korean internet giant Kakao Corp., is in the headlines today after being picked to run tests for the Bank of Korea’s digital currency. The South Korean central bank was searching for companies interested in 10-month cooperation. Kakao will now be responsible for storing and validating unlisted assets as nonfungible tokens [NFTs] on its public blockchain, as the bank was searching for technology help to build its central bank digital currency. Unlisted investments are those made in stocks or assets that aren’t traded on a public exchange. As a result, they are typically traded over-the-counter [OTC]. These shares are generally offered prior to a public offering.
Surprisingly, South Korea’s OTC trading sector has been booming, with K-market OTC’s capitalization reaching a new high of over 1 trillion won ($1.1 billion) by the end of 2020. The increase in OTC trading is an indication of popular interest in cryptocurrencies. Authorities recently imposed strict regulations on crypto-businesses and compelled compliance.
Many tiny exchanges, on the other hand, have had difficulty finding banking partners and are considering shutting down permanently. In reality, big and well-known exchanges like Bithumb were compelled to cut links with foreign exchange platforms. According to a statement released by the government, the trademark use contract with Bithumb Global Exchange and Bithumb Singapore Exchange, which have been utilizing the name and trademark since the signing of a trademark agreement with Bithumb Korea Co., Ltd., will be dissolved. As a result, we will notify you in advance of the termination.
Despite the efforts taken to prevent leading exchanges from being de-banked, they still face the possibility of being denied registration with the Korean Financial Intelligence Unit. Because banks are still analyzing the risks connected with crypto-businesses, this is the case.
Nonetheless, the Bank of Korea expects to complete the contract with Ground X by the end of the month, with the pilot beginning the following month. The goal of the project is to put the CBDC to the test in a virtual simulation environment based on distributed ledger technology, looking at potential use cases such as CBDC issuance, redemption, electronic payments, and settlement, as well as potential integrations with digital artwork and copyright purchases. The country’s plans to test the circulation of a digital won were first revealed by the central bank in February.
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