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The present and future of cryptocurrencies and blockchain in South Korea

South Korea is one of the most technologically advanced countries in Asia, which has earned fame as the “hottest” cryptocurrency region in the world. It is the birthplace of such exchange giants as Upbit, BitHumb, CoinOne, Korbit and Gopax. And even if these names don’t mean anything to you, it’s worth knowing that about 30% of all cryptocurrency transactions in the world are carried out on South Korean trading platforms.

According to analytical reports, South Korea is the leader of the Asian region in terms of the number of cryptocurrency owners. Every third resident of the country is engaged in trading on crypto exchanges here, of which 54% are men, and 46% are women. 31% of South Korean investors are between the ages of 25 and 30, and 27% are between the ages of 32 and 40.

Cryptocurrency trading in South Korea is so popular that a special term has even appeared here – the “Kimchi Premium”, denoting the difference in prices for cryptocurrency on South Korean exchanges compared to other global trading platforms. This term is a reference to the sauerkraut dish, which is a staple of Korean cuisine.

The “Kimchi Premium” is the difference in cryptocurrency prices on the South Korean stock exchange compared to foreign exchanges.

The difference in price may be caused by the lack of high-yield investment options for traders who profit from buying cryptocurrencies on exchanges in Europe or the United States and reselling them in South Korea.

The activity of South Korean traders is best indicated by the figures. As of the end of 2022, the average owner of cryptocurrencies in the country has purchased more than 8000 digital assets, which is almost twice as much as in any other country in the world. Cryptocurrencies are one of the most popular ways of investing among the younger generation, and therefore the authorities of the country pay special attention to the regulation of this market and since 2021 regularly implement initiatives to regulate the market and improve legislation in the field of digital finance.

So, in March 2022, the President of South Korea, Yoon Suk-yeol, announced that he was going to implement a policy of popularizing cryptocurrencies in the country and improve legislation in order to improve the opportunities of young citizens involved in investing in cryptocurrencies. During his presidential campaign, Yeltsin expressed readiness to legalize the initial coin offering (ICO) and changes in the taxation policy of cryptocurrencies in the country. Previously, the threshold for taxation of annual profits from operations with the crypt was $ 2,000, the president proposed to raise this bar to $40,000.

In May 2022, the South Korean newspaper Kukmin published information from a government document in which it was reported that the country’s central bank intends to submit a Basic Law on Digital Assets (DABA) by the beginning of 2024.

The bill will be drafted in accordance with international standards and will draw on the experience of the world’s largest economies, and the Financial Stability Board (FSB) will cooperate with the Basel Bank for International Settlements (BIS) and regulators of the United States and the European Union. Thus, the government of South Korea plans to expand the existing infrastructure for crypto-fiat transactions, allowing more banks to create their own platforms for the exchange of digital cryptocurrencies. The South Korean authorities also plan to create a legislative framework for projects related to the issuance of NFT tokens and introduce rules for regulating ICOs held in the country. The issue of issuing a central bank digital currency (CBDC) is also being considered.

In addition to developing the cryptocurrency market and improving legislation in this area, the South Korean authorities plan to create a digital identification system for 45 million citizens of the country based on blockchain in 2024. Officials are confident that the electronic identity card is one of the newest technologies underlying the digital economy, which is expanding as more and more people work from home and make non-cash payments, including using cryptocurrencies. South Korean economists believe that digital identity cards can bring huge benefits in the areas of finance, healthcare and tax collection, as well as serve as a trigger for accelerating economic growth.

Currently, the government of South Korea is actively working to stimulate innovations in the blockchain, such as the creation of a regulatory sandbox for innovative projects and services using digital currencies, trying to curb speculative activity on this market. In the very near future we will be able to see the results of this activity, but it is already clear that South Korea plans to maintain its leadership position in the cryptocurrency market and in the field of blockchain innovation. This means that more and more residents of the country will be able to take advantage of the new financial systems and continue investing to improve their well-being.

Despite the fact that South Korea is not a traditionally Muslim country, the largest increase in the number of followers of Islam has been recorded here over the past few years. As of the end of 2022, there are about 170,000 Muslims in the country, or about 0.4% of the population.

South Korea cryptocurrency: present and future

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“At the heart of Islamic finance is the prohibition on charging interest. Islamic finance has always been focused on not shifting most of the risks to one side of the financial relationship. In Islamic finance, balance and transparency of transactions should be observed, which can negatively affect our society,” says Mohammed AlKaff AlHashmi, one of the founders of IslamicCoin.

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