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Here’s why South Korea’s Busan with over 3 million residents may be next blockchain Mecca

Here's why South Korea's Busan with over 3 million residents may be next blockchain Mecca

Busan, South Korea’s second-largest city, started its blockchain project four years ago, intending to attract technology, employment, and investment while shifting away from dependency on seaborne commerce and tourism. 

The issue is that the message did not seem to reach the blockchain sector. The city, with a population of 3.3 million people, was named a special blockchain zone in July 2019 by former President Moon Jae-in. As a result, the city was able to host blockchain initiatives that would otherwise face constraints and red tape elsewhere in the nation, as per a report by South China Morning Post.

South Korean local startup Coinplug is creating a blockchain-based public safety reporting app. In 2020, the city issued B PASS – a blockchain-based mobile app and all-in-one ID and electronic wallet for Busan inhabitants. 

Nevertheless, the Busan Chamber of Commerce conducted a poll of 465 blockchain enterprises in the nation in July of this year and discovered that more than 48% were unfamiliar with Busan’s position as a blockchain-friendly zone. Another 21% had heard of the initiative but did not know what it accomplishes in detail.

Busan’s blockchain achievements are underwhelming

According to local media, this lack of interest is evident in the usage of B PASS, which has been accessible for two years but has only had roughly 10,000 downloads. As per Lee Jang-woo, an adjunct professor of global entrepreneurship at Hanyang University in Seoul and a blockchain expert, Busan’s blockchain successes have been underwhelming. 

“I predicted this failure to some degree because only some services and companies using blockchain technology enjoyed the relaxed regulations, while businesses using cryptocurrency were excluded,” Lee said. 

He went on to say that South Korea’s unfavorable stance toward cryptocurrency at the time most likely affected the approach.

Busan changes its strategy

Notably, Busan has changed its approach and struck agreements with three major cryptocurrency exchanges in the past two months: Binance, FTX, and Huobi. The goal is to create the country’s first municipally supported digital asset exchange.

“We will build a new growth engine for the local economy and make it a global digital finance hub,” Park Heong-joon, the mayor of Busan, said at last month’s partnership signing with Binance.

When Busan signed its partnership agreement with Huobi earlier in September, mayor Park said he hoped the firm “will spread the word on Busan’s strong environment and support for digital finance, so that we can draw more blockchain talent to our city.”

He said that the city is proposing tax advantages as part of the package to get more blockchain professionals to relocate there. According to Lee, at Hanyang University, the decision to include cryptocurrencies in the mix makes perfect sense. 

“Part of that is building the digital asset exchange. So I think [the city] has now got the right direction and strategy,” said Lee.

Global exchanges see South Korea as attractive market

While Huobi has said it would bring 1,500 blockchain specialists from abroad to Busan, the two partners, Binance and FTX, have stated that they will help establish Busan’s exchange in the areas of technology and infrastructure, respectively. 

In return, the cryptocurrency exchanges saw potential in entering back into one of the most attractive cryptocurrency marketplaces, which they had left due to stiffer rules; according to Lee of Hanyang University, “the partnerships fulfill needs on both sides.”

Finally, Huobi announced that it would be the primary sponsor for Busan Blockchain Week 2022, which will begin on October 27. This meeting has the potential to be an important occasion in determining whether or not the message that Busan is now open for blockchain and cryptocurrency business has been effectively communicated.

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