Bank of Korea concludes first phase of digital currency trials

abdelaziz Fathi

The Bank of Korea (BOK) presented the initial results of its central bank digital currency pilot, which tested some of the basic functions such as distribution and issuance.

The South Korean regulator said the first phase was successfully completed in December 2021, four months after it launched a process to research the practicalities of launching its CBDC in a test environment. To that end, it has allocated 4.9 billion won ($4.4 million) and picked the blockchain arm of internet giant Kakao, Ground X, as the tech supplier for its government-controlled cryptocurrency.

While the pilot is not a commitment to issue a central bank digital currency, a decision to do so in August was the first exploratory step in Asia’s fourth largest economy. At the time, BOK cited the desire to move the country closer to becoming a cashless society with significant benefits for both businesses and consumers.

The second phase is currently underway, reported YNA news. It aims to simulate core aspects of a potential CBDC system on a commercial scale, including cross-border remittance, retail payments and offline payments.

“We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test,” the BOK said in a press release.

The central banks of China, the UK, Sweden and almost all major economies are investigating or developing a CBDC to modernise their financial systems. China’s e-CNY is the closest to fruition.

The news comes on the heels of delaying the planned taxation on digital assets gains by the South Korean legislative body.

A 20% tax on gains made through cryptocurrency trading  – if the total income is more than 2.5 million Korean won (about $2,000) – was originally set to come into effect this month. If the amendment passes a parliamentary vote, the new taxation rules would come into play on January 1, 2023.

Historically, South Korea is one of the hottest investing and trading markets for cryptocurrencies. However, authorities have been hesitant to regulate the virtual asset class, due to their belief that cryptocurrency regulation could lend legitimacy to the sector.

Separately, nearly 30 cryptocurrency exchanges in South Korea filed with the nation’s regulators to continue their businesses in the country. Out of this figure, the local industry media identified the four biggest crypto exchanges – UPbit, Bithumb, Coinone and Korbit.

Read this next

Retail FX

Investors from Cyprus and Dubai acquire ‘significant stake’ in M4Markets

Seychelles-regulated brokerage firm M4Markets firm has picked up some investment from Cyprus and Dubai based investors in a new funding round that it will be using to grow its business.

Executive Moves

UAE broker Amana elevates Amr Masry to sales director

Amr Masry has been promoted to a new senior role at Amana Capital, becoming the group’s newest Sales Director, following a successful tenure with the UAE-based FX and CFDs broker.

Executive Moves

TopFX promotes Omar Al-Janabi to head of sales and business development

Prime brokerage firm TopFX has strengthened its Middle East operations with the promotion of Omar Al-Janabi, who is taking on an expanded role as global head of sales and business development.

Retail FX

Plus500 says 2022 revenue to be ‘significantly’ ahead of analysts’ estimates

Israeli-based, but London-stock market listed Plus500 said it expects annual revenue and earnings to be ahead of analysts’ estimates even as trading levels normalised from record volumes in the first quarter.

Digital Assets

Crypto derivatives giant BitMEX launches spot market

Crypto exchange BitMEX is looking to branch out of its singular focus on crypto derivatives with a suite of new product offerings. Although derivatives are to remain at the heart of BitMEX’s business, the popular platform will add spot crypto trading as it aims to aggressively grow their user base.

Uncategorized

PrimeXM reports mixed trading volumes for April

PrimeXM has reported weaker trading volumes for April 2022, in line with other institutional and retail platforms that saw the activity of their clients dropped compared to a month earlier.

Digital Assets

DLT Finance approved by BaFin to support brokerage and custody of digital assets

DLT Finance is already partnered with big names within the digital asset space, including Kraken, Bitstamp, B2C2, and Bittrex.

Institutional FX

LUKB taps vestr to launch actively managed products, AMCs

The partnership with vestr goes to show the growing importance of digitising the active investment management space.

Digital Assets

Jewel taps Tokeny to launch stablecoin-as-a-service solution on Polygon

Jewel aims to offer a stablecoin-as-a-service solution to other digital asset and financial institutions B2B, allowing those businesses to provide cheaper, easier and near real time payments with stablecoins issued and redeemable directly at the bank level at Jewel.

<