The central bank had recently completed a 10-month experiment into a digital South Korean won, as authorities revealed. During the project, the bank also tested the use of its CBDC to purchase non-fungible tokens (NFT).
Several economies such as the US, UK, and European Union have been exploring the issuance of CBDCs, while China has already carried out several trials. South Korea began its CBDC trial in 2021 and completed the first of two phases by January 2022.
To support this endeavour BoK established a virtual money laundering and terrorism financing monitoring system and will facilitate data submission. The experiment found that a CBDC could process up to 2,000 transactions per second. However, it also found that distributed ledger technology, which underlies crypto, does not yet have the scalability needed for a retail CBDC. If that is the case, it may be better to use the standard centralised ledger database.
In October the country’s government announced plans to offer citizens with a smartphone blockchain-secured digital identity in a wish to boost economic growth. Authorities believe that with this move, services who have not yet been able to have a full transition into the online space will now be able to do so.
To identify themselves, Koreans are currently relying on resident registration cards, with the proposal aiming to embed those IDs with an app into mobile devices. Korea is set to launch digital IDs in 2024, looking to have them adopted by 45 million citizens within two years.
When it comes to other aspects of the blockchain industry, such as crypto exchanges, South Korea is working on preventing fraudulent activities. Back in August the Korea Financial Intelligence Unit (KoFIU) reported 16 virtual asset service providers to the investigative authorities for operating without the necessary registrations in the country.
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