South Korea to Revive Tech Exports with Metaverse, Blockchain

Chinese City Unveils Plan to Develop MetaverseThe city of Zhengzhou in China recently announced a set of policy proposals aimed at supporting the growth and development of metaverse companies in the region. These initiatives, introduced by the municipal government, include the establishment of a dedicated fund worth 10 billion yuan ($1.42 billion) to facilitate the advancement of the metaverse industry.Photo by Jéan Béller on UnsplashDraft policy proposalsAccording to the government’s draft which was published on Wednesday, metaverse companies that choose to relocate their headquarters to Zhengzhou will have the opportunity to receive a startup capital investment of up to 200 million yuan ($28.34 million). In addition, these companies will be eligible for various other benefits, such as rent subsidies, to help facilitate their operations.It’s worth noting that the policy extends beyond companies with headquarters in Zhengzhou. Any company engaged in metaverse-related use case development within the city, regardless of their headquarters location, can apply for funding. Projects certified as viable by the municipal government can receive up to 5 million yuan ($710,000) in financial support.While the specific date for fund allocation has not been disclosed yet, the municipal government of Zhengzhou has outlined its long-term vision for metaverse development in the city. It anticipates that metaverse-related industries in Zhengzhou will generate an annual revenue exceeding 200 billion yuan ($28.34 billion) by the end of 2025.Stimulating metaverse developmentThese policies apply to local enterprises operating in two distinct areas. Firstly, research endeavors focused on metaverse-related technologies, such as virtual reality, augmented reality, and brain-computer interfaces, are eligible for support. Secondly, the utilization of metaverse technologies in real-world industries, including education, entertainment, and commerce, can also qualify for funding.In addition to the dedicated fund, the government of Zhengzhou plans to collaborate with other governmental agencies and investment firms to secure an additional 50 billion yuan ($7.08 billion) in funding. This funding will be allocated to support various metaverse-related development projects. Furthermore, the city intends to provide cash rewards to metaverse companies upon their listing on China’s primary stock exchanges, aiming to incentivize growth and market participation.The comprehensive plan encompasses crucial technologies in the metaverse industry, such as blockchain, next-gen computer rendering, human-computer interfaces, and artificial intelligence. Furthermore, it strives to establish a digital asset market leveraging non-fungible token (NFT) technology.Broader metaverse strategyZhengzhou joins a growing list of Chinese cities and provinces that aspire to become leaders in the country’s metaverse development. The metropolis of Shanghai, located in the southeastern region, is actively pursuing its own metaverse aspirations. It predicts that its metaverse industry will achieve annual revenues of 350 billion yuan ($49.6 billion) by the year 2025.Elsewhere in China, there has been plenty of activity relative to Metaverse development. Zhengzhou belongs within Henan Province, and at a provincial level, administrators established a metaverse fund earlier this month. Around the same time-frame, Alibaba Cloud, the cloud division of the Chinese e-commerce giant, partnered with layer one blockchain project Avalanche with a view towards creating a metaverse launchpad.As the metaverse continues to evolve and gain prominence worldwide, it will be intriguing to observe the progress and impact of the policies implemented by Chinese cities like Zhengzhou. The concerted efforts to foster metaverse development reflect a broader global trend of recognizing the significance of virtual environments and their potential to reshape various aspects of society.

Taiwan’s Financial Supervisory Commission (FSC), the independent government agency that regulates activity within Taiwan’s securities, virtual assets, banking and insurance sectors, is planning to invite applications from financial institutions to participate in a crypto custody services pilot program, scheduled to commence in Q1 2025. The Central News Agency (CNA), the national news agency of the Republic of China, published a report on Oct. 8, outlining the FSC’s intentions with regard to this crypto custody pilot program. The media outlet confirmed that three Taiwanese banks had expressed an interest in participating in the program.  The Director of the FSC’s Comprehensive Planning Division, Hu Zehua, outlined at a press conference that the regulator is planning to provide further information relative to the pilot program 15 days in advance of inviting applications from prospective participants. Photo by 張 峻嘉 on UnsplashPublic consultationAdditionally, the FSC executive outlined that the regulator intends to collect feedback from the public relative to the proposed pilot program, and fine-tune the process based upon that feedback. Hu stated that he recognizes that based on crypto custody activity carried out overseas, operational security is of paramount importance. Therefore, the FSC is interested in placing emphasis on this aspect of the activity as part of the pilot program.  Illicit funds and money laundering is another area of concern. With that the FSC executive outlined that financial institutions must proactively block virtual assets that are found to originate from illicit sources. In August a Taiwanese couple was indicted for laundering around $50 million in illegal funds through cryptocurrencies. Earlier this month, the FSC revised Taiwan’s regulatory framework relative to anti-money laundering (AML). The update now requires digital assets firms to register with the Taiwanese government by no later than September 2025. Failure to do so may result in these crypto companies being fined up to $156,000 or company executives facing up to two years in prison. Bitcoin, Ethereum and Dogecoin mentionedPilot program applicants will be expected to specify the type of digital assets they intend to custody. Explanatory information released by the FSC gave Bitcoin, Ethereum and Dogecoin as examples. Additionally, applicants are required to outline the type of client they will cater towards in providing a crypto custody service. Among the examples mentioned were virtual asset platforms, professional investors and general investors. The FSC announced at the end of last month that professional investors are now permitted to access foreign virtual asset exchange-traded funds (ETFs) and invest in them through a re-entrustment method. Taiwan has been making progress recently in bringing about regulatory clarity and establishing conditions within which Web3 companies can develop. The FSC had been working towards the production of draft crypto regulations over recent months. This followed a move by Taiwanese legislators in October 2024 to introduce the Virtual Asset Management Bill to parliament, with the objective of strengthening customer protections and establishing industry supervision. In September, the regulator released guidelines, including a measure which bans overseas crypto platforms from operating within the country. 

Hong Kong has launched a pilot program for the digital yuan, marking the People’s Bank of China's (PBoC) central bank digital currency’s (CBDC) first major deployment outside mainland China.  This initiative, facilitated by the Hong Kong Monetary Authority (HKMA), represents another step forward in the integration of the digital yuan into Hong Kong's financial ecosystem.Photo by bady abbas on UnsplashCross-border transactions rather than P2PAccording to a press release, the HKMA and PBoC are working together to enable Hong Kong users to set up personal e-CNY wallets using just their Hong Kong mobile phone numbers. The faster payment system (FPS) will support these e-CNY wallets, allowing users to top up their wallets through 17 retail banks in the Chinese autonomous territory. However, the e-CNY wallets are primarily designed for cross-border payments between Hong Kong and the mainland, and currently do not support person-to-person transfers within Hong Kong. This pilot aims to facilitate transactions for Hong Kong residents using their digital yuan wallets, marking the first integration of a CBDC through a major central bank. The Digital Currency Institute (DCI) is managing the interoperability infrastructure between the FPS and the digital yuan, with a focus on enhancing cross-border payments, a key objective on the G20 countries' roadmap. More functionality promisedLike blockchain protocols, the digital yuan pilot offers 24/7 payment capabilities. Eddie Yue, the chief executive of the HKMA, stated that the e-CNY application and wallet would gradually gain more functionality as the HKMA and PBoC work to encourage more retail merchants to adopt the system. Yue stated: “By expanding the e-CNY pilot in Hong Kong and leveraging the 24x7 operating hours and real-time transfer advantages of the FPS, users may now top up their e-CNY wallets anytime, anywhere without having to open a Mainland bank account, thereby facilitating merchant payments in the Mainland by Hong Kong residents.” The HKMA and DCI are planning upgrades to the e-CNY wallets through real-name verification, aiming to enable corporate use cases for cross-border trade settlements in the future. Adoption strugglesWith at least 140 countries exploring CBDC pilots, China's digital yuan is among the most advanced. China has been actively promoting its CBDC, even paying monthly salaries in e-CNY to government workers and employees of state-owned enterprises. However, as reported by the South China Morning Post, many recipients are hesitant to use the digital yuan due to privacy concerns and other limitations. China's central bank aims to increase the use of the yuan in Hong Kong, especially in tourist areas. Last June, digital yuan ATMs were installed in the resort city of Sanya in an attempt to target use of the currency by tourists. Although the city of Jinan embarked upon an initiative last year to enable digital yuan payments on its bus system, the currency is not yet widely accepted for public transportation across China.  Meanwhile, Hong Kong is in the second phase of its own CBDC pilot, the e-HKD, and has launched a regulatory sandbox for stablecoins to foster communication between regulators and issuers of fiat-pegged stablecoins in the region.