The final days of 2018 have seen a bloodbath for the cryptocurrency market along with global financial markets such as European markets and the U. S. markets which have also remained in turmoil. Despite the shaky market, South Korea’s commitment to blockchain technology remains firm as ever, as is evident from its plans of a $5 trillion ($4.4 billion) investment toward its innovation program in 2019, an increase of over 200% from its current innovation budget. Here’s a look at the key sectors that the investments will help.
Top Sectors – Big Data, Artificial Intelligence, and Blockchain
The government of South Korea has chosen to invest a significant portion of their innovation budget in emerging technologies such as big data and blockchains. The philosophy behind favoring these technologies is that they want to foster the infrastructure of a platform economy with a marked focus on these emerging technology that can automate a lot of the existing jobs in their economy while giving new forms of employment to their urban workforce. These sectors have collectively seen an investment of 580 billion won ($510 million) in 2018. The investment is set to grow more than 80% to 1,040 billion won ($920 million) in 2019. To train their workforce for these highly skilled jobs, the government is willing to spend upwards of 60 billion won ($53 million) for 10,000 specialists in eight promising sectors. These individuals will see even more funding aided by a 30 trillion won ($26 billion) investment by state-led companies.
Earlier this year many investors were wary that South Korea would be unfriendly to cryptocurrencies after it banned local initial coin offerings (ICOs) and issued regulations that reined in cryptocurrency trading. However, South Korea has assured investors that the move was aimed only at fraudulent ICOs that were aiming to dupe citizens. The ban on ICOs has since been lifted, and Bitcoin now enjoys legal status as remittance method in South Korea. South Korea is also expected to pass new policies that cement Bitcoin’s legal status in the country. To further alleviate all of the fears regarding blockchain technology in South Korea, the Financial Services Commission, has commissioned a new panel for the development of cryptocurrencies called the Financial Innovation Bureau. Its main goal will be to provide guidance and formation of a regulatory framework regarding cryptocurrencies.
Private Funding for Blockchains On The Rise
South Korea is home to two of the biggest cryptocurrency exchanges in the world – Bithumb and Upbit which handle a combined daily volume of upwards of $200 million. These exchanges are rapidly expanding as they onboard more users to their platforms every month and are a source of a lot of revenue for the country. South Korea’s largest venture capital firm, Korea Investment Partners (KIP), announced last month that it is investing in its first blockchain startup, TEMCO. TEMCO uses the power of blockchains in supply chain management by using smart contracts on a public blockchain to help enterprises manage their inventory from production to distribution all the way to the end user. This is part of the larger stance of the South Korea government taking a favorable stance on cryptocurrency. For instance earlier this year in July, South Korea regulators had introduced new legislation that would be helpful for blockchain investment. Around the same time, three South Korea ministries were working to produce the final draft of a comprehensive blockchain industry classification scheme for the entire country. Positive moves like these from governments encourage big VC firms to take positions in emerging technology without the fear of government reprisals. Countries like Gibraltar and Malta have also benefited from a positive stance such as this while countries like India, Pakistan, and Nepal have seen their blockchain startups move to different jurisdictions which are more friendly to emerging tech.