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Korea will drive the development of dApps and basic blockchain layers like Ethereum, EOS and NEO

Local publications reported that the South Korean government has finalized plans to legitimize the cryptocurrency exchange market and the blockchain sector with a newly created regulatory framework.

First, local financial authorities will begin implementing new legislation that recognizes cryptocurrency exchanges as regulated financial institutions and brokers. Local cryptocurrency exchanges such as Bithumb, Coinone and Korbit are needed to equip sophisticated Know Your Customer (KYC), Anti-Money Laundering (AML) and internal management systems to stay on par with banks and other institutions in the traditional financial sector.

Cryptocurrency exchanges and dApps

The government of South Korea will separate blockchain-related products, base layers and dAApps from cryptocurrency exchanges. Trading platforms are regulated under a category called “Cryptocurrency Exchange and Brokerage”, while dApps and blockchain-based applications are overseen by local authorities under a category called “Blockchain Software Development and Integration”.

Related: South Korea is making strides in regulating cryptocurrencies

A document entitled “Blockchain Technology Industry Categorization Adjustment Plan,” obtained from TheBchain, a local publication in South Korea, revealed that the South Korean authorities plan to facilitate the development of the blockchain to ensure that the technology is in large scale Industries such as game development, computer programming, hosting, decentralized exchange, and dApps.

Korean Standard Statistics Classification, a government-funded organization, published the aforementioned document, which explicitly describes areas of blockchain development as follows:

  1. Development and integration of blockchain-based gaming software
  2. Development and integration of blockchain-based mobile game software
  3. Development and integration of blockchain-based system software
  4. Blockchain-based applicable software development and integration
  5. Blockchain-based computer programming service
  6. Blockchain-based computer systems provider
  7. Blockchain-based hosting service provider
  8. Blockchain-based exchange of digital assets
  9. Blockchain-based information service provider

Going forward, startups operating in the blockchain sector of South Korea will fall under one of the nine categories created by the government after the introduction of new cryptocurrency and blockchain legislation.

To clarify, government officials stated that blockchain-based system software development refers to dApp layers such as EOS, Ethereum, and NEO. Therefore, developers or startups in South Korea who intend to develop smart contract blockchain platforms similar to Ethereum fall into this category.

South Korea recognizes crypto exchanges with the introduction of the blockchain classification systemRelated: South Korea Recognizes Crypto Exchanges With Adopting Blockchain Classification System

In contrast, blockchain-applicable software development refers to the development of blockchain-related products that can be implemented directly into existing infrastructures in industries such as finance, supply chains, insurance, finance, security, and copyright protection.

The government of South Korea has decided to completely separate blockchain development and cryptocurrency trading, as the latter requires significant resources and manpower to monitor, while the former does not require financial authorities and cybersecurity companies to regulate.

By the end of July 2018, after receiving feedback from 160 institutions in South Korea, the government is expected to publish final legislation on cryptocurrency and blockchain, which will be passed by Congress later in 2018.

Promote the growth of dApps

Local analysts expect the optimistic legislation and surprise decision by the South Korean government to regulate and legitimize both the cryptocurrency and blockchain sectors to fuel the growth of dApps, basic blockchain protocols, cryptocurrency exchanges and the global cryptocurrency industry as a whole to crank.

The South Korean government’s imposition of revised blockchain legislation could coincide with the government’s reverse ban on domestic Initial Coin Offerings (ICOs), which will likely lead multi-billion dollar conglomerates like Cocoa and Bithumb to their original plans for engagement reconsider token sales for investors in South Korea.

Quadence

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