The South Korean city of Busan has been planning to launch a city-run, blockchain-powered digital assets exchange, but the project has experienced delays and setbacks. Initially aiming to become the first city in the world to launch a crypto exchange, Busan’s plans have been hindered by the central government’s policy regarding initial coin offerings (ICOs), which have been outlawed in South Korea since 2018. Despite promises to review the ICO ban, it remains in place, leaving the domestic crypto sector in a state of uncertainty.
Busan had originally intended to create and then sell off the exchange to private sector firms, but after abandoning plans to list traditional cryptoassets, the city announced it would focus on listing tokenized assets such as real estate, intellectual property rights, carbon emissions rights, and commodities. However, the exchange will now initially focus solely on tokenized precious metals. The South Korean won has emerged as the leading fiat currency for cryptocurrency trading, surpassing the US dollar in Q1, highlighting the growing importance of cryptocurrencies in the region.
Busan City had signed a business agreement with the BDX Consortium to launch and operate the digital asset exchange. However, the consortium failed to make a $7.3 million equity capital payment as scheduled, breaching the terms of the agreement. The consortium is required to establish an exchange business called Busan BDX within 60 days of the agreement and complete the payment, but it failed to do so by the specified deadline. This has led to concerns about the viability of the project and the future of the consortium’s involvement.
Despite the payment delay, Busan authorities have not yet terminated the agreement with the consortium and are hopeful that the group will come up with the necessary funds. The consortium consists of 11 companies who have indicated that they will make the payment by the end of May. However, this could lead to further delays in the launch of the exchange as the operator is unable to hire employees, build a platform, or train staff until the payment is made. Busan City had initially planned to have the exchange operational by the end of 2023 but has since had to revise its timeline due to various challenges.
The initial plans for Busan’s digital asset exchange included crypto trading and the trading of real-world goods and products on blockchain networks. The project has faced criticism from some officials for being ineffective in its handling of the delays and setbacks. However, a spokesperson for Busan City remains optimistic, stating that the decision to start trading tokenized precious metals first and gradually expand the scope of the project should be viewed as a process of trial and error rather than a delay. This endeavor marks the first time a city has attempted to launch a business of this nature, highlighting the challenges and complexities involved in such an innovative undertaking.
