Jeju Island dreams of blockchain

The governor of Jeju Island wants to make the island a hub for the blockchain industry.

Won Hee-ryong, governor of Jeju Island, formerly requested that the central government designate the island a special zone for blockchain and cryptocurrency during a meeting on Wednesday with high-ranking government officials and policymakers at Sejong.

“Blockchain is an opportunity for Korea to take the lead in global internet platform [development,]” said Won during the meeting, proposing that the central government, the provincial government of Jeju Island and private experts form a task force to discuss how the island could become a hub for the industry in Korea.

Top policymakers that attended Wednesday’s meeting include Kim Dong-yeon, Korea’s finance minister and deputy prime minister for the economy.

The governor said Jeju Island, which is being developed as “Jeju Free International City,” could help the government implement necessary measures to develop the emerging industry, including drastic deregulation.

“Blockchain can cut costs, provide stable transactions and essentially has the potential to become a game changer that could alter the ecosystem of the internet platform industry,” Won said. “For Korea to become a leader rather than a consumer of this new global industry, we need to quickly allow [the operation of] blockchain and cryptocurrency [firms].”

According to Won, blockchain start-ups in Jeju would be free to hold initial coin offerings (ICO), a fund-raising activity where blockchain companies distribute their coins or tokens to potential users of their services or to investors.

“Entrepreneurs looking to innovate should be allowed to raise funds through cryptocurrency,” Won said.

This would enable Korean blockchain start-ups, who have held ICOs overseas in countries such as Switzerland and Singapore where regulatory frameworks are more favorable, to do their fund-raising activities on home soil.

Global blockchain firms are reportedly supportive of the idea.

Leading blockchain companies are reportedly in talks with the government of Jeju Island on how they could cooperate, including Icon, a Korean blockchain project whose coin currently ranks 31st on a listing provided by CoinMarketCap, a cryptocurrency information provider.

“If ICOs were allowed in the country, it would prevent the outflow of capital from Korea,” said an industry insider. “Korea has so many good projects which, unfortunately, all decide to do their coin offering elsewhere due to the government’s stance.”

Although it has not rolled out regulations that completely ban ICOs in Korea, the government designated them a “fund-raising activity without permission” last year, making them essentially illegal.

The stance of the central government could be a major hurdle for Won and the provincial government of Jeju Island in their attempt to make the island a blockchain hub.

But while the odds may be against the plan for now, the provincial government is determined to do whatever it can to encourage blockchain businesses to flourish on the southern island.

“We are currently in the process of a reshuffle to create a department dedicated to developing the blockchain industry on the island,” explained an official from the Jeju provincial government. “Things will become more materialized by the end of this month.”

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]