South Korea has made a name for being one of the most crypto-friendly nations in Asia. Even with the government looking to enforce a new tax policy, crypto embrace in the country has been nothing short of impressive.
Heading into March, the South Korean government has decided to step even deeper into crypto waters as it looks set to make investments easier.
Pioneering Private Crypto Investments
In late February, Kookmin Bank - one of South Korea's largest financial institutions - announced that it would offer a crypto investment fund to retail investors in the country. In its announcement, Kookmin Bank debuted a Digital Asset Management Preparatory Committee that will determine development strategies for investment funds that will focus on digital assets and artificial intelligence.
As Kookmin Bank explained, it is working hard to launch a crypto exchange-traded fund (ETF) and several crypto futures investment funds. With this committee, it hopes to effectively assess the risk parameters of the funds and work towards a proper launch soon enough.
Kookmin Bank is one of South Korea's largest financial institutions, with research from Macro Trends showing that it had about $520 billion in total assets as of last September. Honggun Kim, the company's head of quant management, explained that they plan to launch a crypto investment index and a fund that uses an outsourced chief investment officer (OCIO).
The OCIO model ensures that Kookmin Bank will be able to provide principal investment guarantees. It can be used in investment funds, pensions, and much more. Kookmin might consider Grayscale Investments or Fidelity Asset Management as its OCIO, with both companies having a lot of experience in the industry - especially with investments.
Korea in The Metaverse
The investment fund launch is the latest pro-crypto move by South Korea. The country has always been seen as a hotbed for crypto activity, especially now when regulations are slightly getting clearer.
A few days after the announcement came out, the South Korean Ministry of ICT, Science, and Future Planning said that it had pledged $168 million to create a metaverse ecosystem to support the growth of corporate engagement and digital content development in the country.
In an official statement, the ministry explained that the funds will be spent to achieve four primary objectives as it looks to create an immersive metaverse ecosystem - tagged "Expanded Virtual World." The government is looking to use the metaverse to expand the virtual growth of cities, and optimize media awareness and the education industry.
As part of its initiative, the South Korean government plans to support content creators on different fronts to attract the right talent that will help improve its platform. It is committed to launching different initiatives - including a hackathon, a metaverse development contest, and several other creative activities.
With the private industry investing heavily in the metaverse, this seems like as good a time as any for the government to support.
Park Yungyu - the ministry's head of communication and policy - stated in the announcement that the initiative will be part of the government's "Digital New Deal." This includes a set of policies designed to grow the use and reach of digital technologies across South Korea. They expect that the metaverse will have a global reach, and they're looking to ensure that citizens have access to it.
Both the metaverse project and the ETF are huge boosts for South Korea. As one of the most pro-crypto counties on the Asian continent, South Korea is looking to lead in industry developments.
Moving The Won Into the Digital Age
While private uses are thriving, the government is also moving quickly on its central bank digital currency (CBDC). In January, the Bank of Korea announced that it had successfully completed its first CBDC mock testing. The phase, which began in August 2021, involved testing out some of the primary functions of the asset - including issuance, distribution, and transactions.
Now, the second phase will look to test some of the real-world uses of the app. These include retail payments, offline transactions, and cross-border payments.
"We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test," the bank stated.
The bank has said that it will also look to onboard other financial institutions - in line with tests run by the Peoples' Bank of China. But, unlike the digital yuan, the digital won is expected to focus on optimizing user privacy.
All in all, the second testing phase is expected to be completed in June. After this step, the Bank of Korea should be able to roll out a commercialization and launch plan.