South Korea Embraces Blockchain: New Digital Asset Act, K-Culture Tokenization, and More

According to the Polymesh report titled "Regulatory Developments in Digital Assets", South Korea has made a significant move in the crypto industry by passing the "Digital Asset Basic Act" (DABA). This Act introduces 17 legislative proposals aimed at balancing blockchain development with investor protection.

The Act, which is expected to be implemented into law in June 2024, includes measures such as capital reserve requirements for exchanges and the establishment of a separate market for digital securities.

Shinhan Bank, the nation's oldest bank, has also become an equity investor in the Korea Digital Asset Custody Co. (KDAC), a consortium for startups providing digital asset custody solutions. Shinhan Securities Co., Ltd, part of the Shinhan Financial Group, has launched its "STO Alliance", a consultative body for the development of security tokens. 

However, the path to digital asset regulation in South Korea hasn't been without resistance. The Financial Services Commission (FSC) and the Bank of Korea (BoK) have been in a dispute over regulatory supremacy for digital assets. The BoK has demanded a right to access data from digital asset service providers, arguing that digital assets may pose a threat to financial stability.

South Korea's only legislation to explicitly define and regulate digital assets is an amendment bringing digital assets within the scope of the Act on Reporting and Use of Specified Financial Information, known as the "Anti-Money Laundering Act."

In a unique blend of culture and technology, South Korea is planning to use blockchain technology to spread its popular culture, known as "K-culture". The city of Busan plans to roll out a city-backed decentralized digital commodities exchange that will focus on tokenized products that take advantage of the city’s cultural strengths.

In related news, Cube Entertainment, the fifth-largest K-pop company, has moved into the metaverse via a partnership with Animoca Brand’s gaming subsidiary The Sandbox. The partnership will see Cube creating a “K-culture complex” filled with Korean cultural content on virtual land in The Sandbox.

Finally, global digital asset custodian BDACS has announced its intention to establish a project for the tokenization of Korean culture built on the Polymesh blockchain. This move aims to unlock new engagement for fans, artists, producers, and investors.