Politician Won Hee-ryong is the current governor of Jeju Province of South Korea.
The following is an exclusive contribution for the 2018 year of CoinDesk under consideration. It has been translated into English by the Korean.
Although there are problems with blockchain that need to be resolved, there is a growing consensus on the great potential of the technology. Blockchain is a disruptive technology that is not limited to any particular field and has a wide range of applications including finance, logistics, medicine and intellectual property rights.
Combining blockchain with cryptocurrencies is an inevitable step to take full advantage of the potential of technology. Blockchain confers credibility to cryptocurrencies, while cryptocurrencies allow a wide range of business models that can help drive blockchain growth.
However, the new service models enabled by cryptocurrencies conflict with existing economic and financial systems. This is particularly true for initial coin offerings (ICO), in which the cryptocurrency is issued in the early stages of a blockchain asset to raise capital.
Countries around the world are grappling with the problem of how to develop laws and institutions to solve this conflict. Many countries are implementing separate systems to regulate cryptocurrencies and ICOs, or attempting to bring ICOs under the umbrella of existing institutions through the interpretation of securities laws.
In Korea, all forms of ICO have been banned since September of last year. However, since no clear legislation on follow-up has been issued, cryptocurrencies and ICOs still need to be properly integrated into the market. The uncertainty caused by this situation has left many companies relocating abroad, leading to a decline in the domestic sector.
In this context, I spoke with the central government and the Blue House on two occasions in August of this year to formulate a formal recommendation to turn Jeju into a special blockchain zone.
To achieve this, I remain involved in negotiations at the operational level with the central government through the Ministry of Economics and Finance, the Financial Services Commission and the Presidential Committee on the Fourth Industrial Revolution.
Local action, national vision
When talking about the blockchain industry, the main goal of Jeju Province is to identify and promote a variety of blockchain projects through cooperation between the public and private sectors.
Jeju is currently engaged in negotiations to introduce blockchain into a number of sectors, including traffic management, VAT refunds to foreign tourists and waste battery management. Overall, we believe that private sector support for the creation of a variety of service models is preferable to taxpayers' investment to build a blockchain complex and provide services driven by the public sector.
The second initiative of Jeju Province is establishing a clear set of standards for cryptocurrencies and their issuance. This does not mean indiscriminate permission for ICOs or relaxing regulations. Instead, Jeju's goal is to establish clear rules and standards for ICOs within the region's borders and enable ICOs to be healthy companies.
To achieve this goal, Jeju seeks to exploit its unique legal position under the "Jeju Special Law".
As a free international city, Jeju aims to use its institutional autonomy to create a special regulatory zone for blockchains and cryptocurrencies, which represent new global industries and require an institutional basis.
A region of special regional blockchain has two main advantages. The first is flexibility. While many different ICO models are coming out, including STO, IEO and DAICO, and the & # 39; economics of tokens & # 39; it is evolving rapidly, a flexible regional approach is more conducive to the enactment of appropriate regulations while engaging in regulatory experimentation with legislation at the national level.
Evolving at the speed of the market
The second advantage we would have as a special blockchain zone is speed. The national legislative process is cumbersome and takes time.
On the other hand, if local governments are given the authority to create their own rules and standards, the ordinances can be promulgated quickly to reduce market uncertainties in a short period of time. To promote local industry, Jeju aims to take advantage of this flexibility and speed to establish clear standards and regulations on cryptocurrencies and their issuance.
Why are we moving now? From a long-term perspective, we are at a point where overheated expectations have stabilized and the market can be seen from a more rational point of view, making this the right time to establish adequate institutions for blockchain and cryptocurrency.
Yes, the blockchain and cryptocurrency markets are cooling rapidly due to a sharp decline in cryptocurrency prices recently. The number of ICO projects is also decreasing at a considerable rate. The skeptics of cryptocurrency believe that the current trend will eventually lead to the end of cryptocurrencies, since they have no intrinsic value.
However, others believe that the current situation simply represents the end of unrealistic expectations and that technology has now entered the "valley of death" phase of the advertising circle.
During this process, small but flexible regional innovations can help reduce the burden of creating national systems and provide a positive sense of direction.
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Image of the town hall via Shutterstock