South Korean central bank eyes P2P transaction tests for CBDC pilot in October

Seoul’s Seocho District Leverages Blockchain Coins to Catalyze Social ImpactSeocho District, one of the 25 districts in the South Korean capital of Seoul, is leveraging blockchain technology to tackle environmental and welfare issues with the introduction of the “Good Seocho Coins,” as reported by local news outlet Shinailbo.Photo by TANIM MUNSHI on UnsplashContribute and earn rewardsUnder this program, residents of Seocho can earn Good Seocho Coins by engaging in socially beneficial activities. Each coin holds a value of 100 KRW ($0.076) and can be utilized for various purposes such as accessing facilities, enrolling in educational courses, and making purchases at the Seocho Community Center and the Seocho Joongang Senior Welfare Center.From recycling to in-kind donationsTo earn these coins, residents can participate in three categories of activities: recycling, identifying marginalized households, and making in-kind donations. By returning items like paper bags, clothes hangers, empty plastic bottles, and ice packs to 300 Carbon Zero-certified stores within the district — ranging from coffee shops to laundromats and butcher shops — residents can earn coins. For instance, returning ten hangers or empty plastic bottles would earn them a coin.Residents who identify marginalized households and assist them in obtaining welfare benefits will receive ten coins, while those who connect them with social services will earn five coins.Talented individuals can also contribute to the community and earn coins. For example, photographers, hairdressers, makeup artists, and performers of the non-verbal comedy show Nanta can donate their services and earn one coin per hour. Additionally, health educators and volunteers can earn coins by assisting residents aged 60 or older.Expanding horizonsOriginally conceived as an initiative to promote the health and community engagement of elderly individuals, the Good Seocho Coin project underwent revisions last month to encompass a broader community through regulatory changes.Mayor Jun Sung-soo of Seocho District stated that the aim of this initiative is to harness the potential of blockchain technology and motivate district residents to actively contribute towards tackling a wide range of social challenges. He further highlighted the district’s intention to broaden the scope of this initiative in order to cultivate a sense of pride and satisfaction among the residents, leading to a positive ripple effect throughout the community.

Bgin Blockchain Limited, a crypto mining equipment manufacturer headquartered in Singapore, filed documentation last Friday with the Securities and Exchange Commission (SEC) with a view towards launching an initial public offering (IPO) in the U.S. The Feb. 21 filing, a Form F-1 registration statement, outlines that the company wishes to go forward with the IPO after the effective date of the filing has been established. Bgin identified itself as an “emerging growth company.”  The registration statement was filed on behalf of Bgin by Hunter Taubman Fischer & Li LLC, in conjunction with the underwriters represented by Robinson & Cole LLP. It proposes to offer the U.S. investing public 59.54 million Class A ordinary shares and 15.69 million Class B shares. As part of its plan, Class A shares would be listed on the Nasdaq stock exchange using “BGIN” as the ticker symbol.Photo by Leslie Lopez Holder on Unsplash$50 million raiseIn a statement published on Renaissance Capital's website, the independent investment bank outlined that Bgin is seeking to raise $50 million in capital through the IPO.  It’s understood that funds raised by way of the IPO will be utilized to ramp up research and development efforts. The bookrunners, responsible for managing the IPO, are Chardan Capital Markets and The Benchmark Company. As yet, no information has been provided with regard to how Bgin will price its share offering. Renaissance described Bgin as a digital asset technology company “with proprietary cryptocurrency mining technologies and a strategic focus on alternative cryptocurrencies.”  The company, founded in 2019, focuses on the design, manufacture and distribution of mining equipment relative to Kaspa (KAS), Alephium (ALPH) and Radiant (RXD) blockchain networks. Bgin supplies 8nm and 12nm ASIC chips dedicated to these alternative blockchain networks, which all depend on the use of a proof-of-work (PoW) consensus mechanism. Additionally, Bgin mines cryptocurrency itself while providing a hosting service for crypto mining, with facilities in the U.S. and Hong Kong. It hosts 4,020 mining rigs for customers, with 3,330 of these located within facilities in Iowa and Nebraska.  Across various subsidiaries Bgin manages 33,862 active mining rigs in the U.S. within its own mining operations. And additional 12,000 non-operational rigs are currently in storage facilities in the U.S. and Hong Kong. Over a 12-month period ending on June 30, 2024, the company recorded revenues of $392 million. In 2023, the firm recorded sales of 68,000 mining rigs. In H1 2024, the company sold over 47,000 mining machines. The filing disclosed that the company’s Hong Kong subsidiary was responsible for considerable crypto mining facilities in mainland China prior to China deeming the activity to be illegal in 2021. Providing full disclosure in the lead-up to its IPO, the firm warned that it continued to operate crypto mining facilities in China for a number of months in violation of that law. It identifies this item as a risk factor as potentially, the firm could be penalized and fined.

Dunamu, the operator of South Korea’s largest crypto exchange, Upbit, secured approval to renew its registration as a virtual asset service provider (VASP), ending 16 months of regulatory limbo that had clouded the domestic market.Photo by Daniel Bernard on UnsplashAccording to Newsis, the Financial Intelligence Unit (FIU) under the Financial Services Commission (FSC) granted the approval on Dec. 23. Industry participants view the decision as a stabilizing signal for the sector amid the country’s evolving crypto regulations. Under South Korean law, VASPs must renew their licenses every three years. Dunamu submitted its application by the statutory deadline of Aug. 21, 2024, but the review faced prolonged delays due to FIU staffing shortages and overlapping sanctions proceedings. Regulators had flagged Dunamu for alleged violations regarding customer due diligence and transaction restrictions, resulting in a 35.2 billion won ($24.4 million) fine. Prior to the fine, the FIU issued a disciplinary warning to Dunamu’s chief executive and ordered a three-month partial suspension of operations. Dunamu is currently contesting the suspension and warnings in court, with a fourth hearing scheduled for February 2026. Despite the ongoing litigation, the company stated it has addressed all regulatory issues and implemented measures to prevent recurrence. Market clarity fuels expansion, IPO ambitionsWith uncertainty surrounding the market leader resolved, observers expect other exchanges to feel emboldened to pursue expansion, including new business launches and potential initial public offerings (IPOs). Bithumb, the country’s second-largest exchange, is weighing a public listing as early as next year. Securing license renewal would bolster market confidence and expand the company’s strategic flexibility. Other major platforms, including Coinone, Korbit, and Gopax, filed renewal applications late last year. Each faces sanctions proceedings for alleged legal violations, leaving the market closely watching for FIU rulings. Exchanges recruit ex-regulatorsWith regulatory scrutiny remaining a constant challenge, South Korean exchanges are increasingly recruiting former senior financial regulators to navigate the legal landscape. Citing data from the FSC and the Financial Supervisory Service (FSS), Segye Ilbo reported that the flow of senior officials into the crypto sector has accelerated. Between January and November, eight former FSS officials at Grade 4 or above moved to crypto firms—well above the historical norm of one or two annually. Over the past two years, 16 former FSS officials have moved into the crypto industry, with nine joining Dunamu and seven moving to Bithumb. Industry insiders link the trend to the enforcement of the Virtual Asset User Protection Act in July 2024, which brought the sector under a formal regulatory framework. Exchanges are seeking the expertise of retired regulators to manage legal risk and strengthen government relations, particularly ahead of planned phase-two legislation focused on stablecoins. TradFi enters as systemic risks watchedAs digital assets move within official regulatory boundaries, traditional financial institutions are accelerating their entry into the sector. On Dec. 26, Korea Investment & Securities signed a memorandum of understanding (MOU) with Bithumb to collaborate on asset management services, Yonhap News reported. The partnership aims to combine the brokerage's equities expertise with the exchange's digital asset capabilities to offer tailored products. However, the deepening ties between crypto and traditional finance have drawn the central bank's attention. In a Financial Stability Report released Dec. 23, the Bank of Korea (BOK) noted that the correlation between Bitcoin and the S&P 500 has increased since 2020. The BOK attributed this to the introduction of crypto-related financial products, such as ETFs, and increased participation by institutional investors and publicly listed companies holding crypto. Spillover risks in South Korea remain contained given the limited level of corporate participation, despite the government’s move earlier this year to gradually permit corporate crypto holdings. However, the central bank warned that greater institutional participation enabled by regulatory easing could intensify risk transmission. The report underscored the need for safeguards to insulate Korean equities from crypto-market shocks.