Busan City Establishes the Digital Exchange Promotion Committee

[Executive Summary]

• Busan City launched a promotion committee for the establishment of “Busan Digital Asset Exchange (Busan Exchange).” The city plans to initiate the Busan Exchange’s services by the end of this year. According to the committee, the exchange will be a decentralized exchange with a separate deposit and settlement function, led by the private sector. Yet, there is a growing concern about whether the establishment of the exchange would be realized as planned since the encompassing blockchain regulation-free special zone project itself has not made much progress. As of now, some of the city’s original plans seem to have become difficult to realize.

Last month on December 19, Busan City launched a promotion committee for the establishment of “Busan Digital Asset Exchange (Busan Exchange).” As one of the key pledges by the current mayor of the city, the Busan Exchange is planned to have its service initiated by the end of this year. However, there is a growing concern about whether the establishment of the exchange would be realized as planned since the encompassing blockchain regulation-free special zone project itself has not made much progress.

According to the committee, the exchange will be a decentralized exchange with a separate deposit and settlement function, led by the private sector. During the first half of this year, the committee plans to select an asset management company to secure funds by recruiting member companies of the exchange.

The city, designated as a blockchain regulation-free special zone in 2019, has attempted to establish a digital asset exchange several times in the past but failed as it had disagreements with related ministries regarding the project. Starting with Binance in August last year, the city signed MOUs with global virtual asset exchanges such as FTX, Huobi Global, Huobi Korea, Crypto.com, etc.

Currently, some of the city’s original plans, such as attracting global virtual asset exchanges to the city to supply liquidity by sharing order books with them, as well as providing futures trading services that are not currently provided by domestic exchanges to differentiate the Busan Exchange from others, seem to have become difficult to realize.

The promotion committee also announced on the 19th of this month that it would establish the world’s first decentralized digital commodity exchange in Busan and ultimately foster it as a decentralized exchange where all digital assets based on blockchain technology are traded under fair regulations.

Fully utilizing the advantages that the city carries, including rich cultural contents such as the Busan International Film Festival and G-Star, the committee plans to establish a decentralized digital commodity exchange and start operation within this year.

The Busan Exchange may offer a sizable potential for the sector if it is successful in producing observable outcomes. The Busan Exchange will continue to enjoy some political backing because it is a project with significant exposure for Korea’s second biggest city. Accordingly, there is always a chance that Busan may provide advantages and exemptions in order to support the large-scale project. Follow our blog to closely track the development of Busan City’s plan to establish the first public-run digital asset exchange in Korea.

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