Busan

Main article: South Korea

2022: How three crypto exchanges help Korean city become digital asset capital

Over the past two weeks, three major crypto exchanges - Binance, FTX and Huobi - have signed memoranda of understanding with the Busan city government aimed at developing blockchain infrastructure in South Korea. This was announced on September 16, 2022 by representatives of Huobi Global.

South Korea has taken a place at the forefront of the global crypto space, and it seems that the partnerships mark a breakthrough stage in the development of the country's crypto infrastructure. Against the background of crypto-zima, the agreements are expected to give a new impetus to the development of blockchain projects in Korea and increase the level of play for the entire industry.

Blockchain technology is staunchly associated with cryptocurrencies, but its application goes far beyond digital assets. Blockchain is like a ledger that stores the smallest details and cannot be destroyed. This is a decentralized file cabinet that provides a permanent and unchangeable record of transactions. Blockchain will help make municipal services more efficient and secure, as well as speed up and simplify the usual bureaucratic processes. In addition, blockchain can optimize transport costs, monitor roads, find budget gaps and even increase energy efficiency.

Given that the population of cities is steadily growing, life in megacities can turn into a nightmare without a system of management and accounting. Nearly 7 in 10 people in the world will live in cities by 2050 - up from 56% of the world's population for 2022, according to the World Bank. Over two decades, the world's urban population will grow 1.5 times from the current 4.4 billion to 6 billion. This will create a colossal burden on the urban infrastructure in the areas of basic services, transport and housing.

Busan since 2019 has the status of a "blockchain zone without regulation"
Photo: wikiway.com

In 2019, the South Korean Government agreed to assign Busan the status of a "blockchain zone without regulation." At the same time, the Ministry of Startups and Small and Medium Businesses of Korea chose Busan as a test zone for the introduction and testing of blockchain technology. In the same year, South Korean President Moon Jae-in stressed the need for "regulatory innovation" of blockchain technology, he called it a "survival issue."

Among the prerequisites for choosing Busan, experts name a number of factors. First, Busan is South Korea's second largest city. Not as large as Seoul with 9.7 million inhabitants, but suitable for testing technologies. Secondly, in Busan - the main port of Korea is located, and part-time the fifth busiest port in the world. At the end of 2018, the country's government launched a dense blockchain project that is designed to "increase efficiency, as well as reduce costs and waste in the port."

Over the past five years, Busan has implemented various initiatives and partnerships to take the place of South Korea's leading blockchain hub. The country has some of the strictest cryptocurrency rules in the world: transactions with private wallets are prohibited, transactions exceeding the established amount must be reported, and local exchanges are subject to strict privacy laws. Despite these measures, as of the end of 2021, the cryptocurrency market in South Korea amounted to $45.9 billion, and the total number of registered users reached 15.3 million people. The country has already launched its own blockchain-based identification system, as well as a blockchain-based driver's license platform.

The Busan government is developing far-reaching plans to launch a digital asset exchange, according to Coindesk Korea. In particular, it is planned to create an ecosystem for operations with digital assets based on securities tokens and introduce a business model for digital assets focused on the development of regional industries.

As of September 2022, Binance, FTX and Huobi are the leaders of the South Korean crypto market. As noted in Huobi Global, there are several factors that helped the three exchanges take a leading position in the country. Thus, the scale of the Binance exchange allows you to develop, introduce innovations into the industry, as well as test hypotheses and take risks. Binance's support will move Busan closer to the goal that the city's government has set to become a global hub for digital finance.

About FTX in the industry, it is generally accepted that this is a dark horse. The exchange appeared on the market relatively recently, only in 2019. However, it ranks among the leading exchanges in both spot trading and derivatives trading. FTX innovator Sam Bankman-Fried became even more famous after the collapse of the cryptocurrency market, as a rescuer of numerous insolvent companies.

Huobi Exchange is one of the first cryptocurrency exchanges. The exchange is actively conquering new markets, and only in the last few months has received licenses to conduct certain activities in Dubai (UAE), Australia and New Zealand. The exchange interacts with regulators of different countries and aims to fully legalize activities in all jurisdictions.

Obviously, after signing three development memoranda at once, there is no shortage of strong applicants for the creation of blockchain infrastructure in Busan.

Huobi is the only exchange with a physical office in South Korea, as well as a license to operate in the country. This offers an advantage over the other two exchanges that signed a memorandum of understanding with Busan. Compared to Huobi, Binance and FTX's partnerships with Busan are limited only to setting up an office in the city, coordinating 2022 Busan Blockchain Week and conducting blockchain training.

However, regardless of how the battle for Busan's blockchain sector ends between the three largest crypto exchanges, it is confident that Busan and South Korea have already won. The amount of funds, efforts and personnel that exchanges invest in urban technology can hardly even roughly compete with public or single investments of private investors.