Busan, South Korea’s second-largest city, is embarking on a mission to become a prominent player in the blockchain and digital asset industry. The city is allocating a significant budget of 100 billion Korean won ($75 million) to fund open blockchain development compatible with global standards, with support from public financial institutions and private companies. This initiative is part of the Blockchain Innovation Fund (BIF), which aims to foster Busan’s blockchain industry and infrastructure.
The primary objective of this endeavour is to create a public blockchain network that seamlessly integrates with major blockchain platforms like Ethereum and Cosmos. The goal is to streamline various blockchain-based services from different networks onto a single platform at the city level, transforming Busan into a true blockchain city.
Busan City has been actively experimenting with blockchain technology in its trade-free zone. However, the decentralised nature of these experiments, often on different blockchains, led to inefficiencies, prompting the city administration to focus on a public blockchain network that can smoothly connect with global blockchain networks such as Ethereum.
As part of this long-term blockchain development plan, Busan aims to launch the Busan Digital Asset Exchange in the first half of 2024. This exchange will go beyond listing digital assets; it will tokenize securities like precious metals and raw materials such as gold, copper, and oil. The city’s future plans even include tokenizing and trading global intellectual property rights and carbon emissions rights.
The Busan Digital Asset Exchange is expected to operate with private capital, with plans for a public offering in mid-October, followed by the selection of a business operator in November.
This ambitious project is part of Busan’s broader strategy to position itself as a global blockchain and digital asset hub. The city has signed memorandums of understanding with major cryptocurrency exchanges like Binance, Crypto.com, and Gate.io, aiming to create a crypto trading venue by the end of the year.
Busan’s aspirations go beyond trading cryptocurrencies. The city is actively seeking to attract blockchain companies and has designated a regulation-free zone for testing blockchain technologies and related businesses. Additionally, a venture capital group recently pledged $100 million in investments to support Busan’s blockchain efforts.
The city’s determination to embrace blockchain and digital assets comes in the face of demographic challenges. Busan has one of the highest proportions of elderly residents in South Korea, and officials believe that becoming a blockchain hub will attract younger talent to the city. While the idea is novel, some experts are sceptical about whether it will be sufficient to address the demographic issues fully.
Busan’s vision also aligns with South Korea’s efforts to embrace blockchain technology, albeit in a regulated manner. The government has plans to allow the issuance of security tokens (STOs) and has shown interest in fostering blockchain innovation while maintaining regulatory oversight.