South Korea to Allow Regulatory Sandboxes Related to Blockchain-based Overseas Remittances

The South Korean Ministry of Science, ICT and Communications intends to examine whether or not to allow regulatory sandboxes related to blockchain and distributed ledger technology (DLT)-based overseas remittances after the National Assembly Act (Special Act) on the reporting and use of certain financial transaction information passes the National Assembly.

The Ministry of Information and Communication said in a briefing on the 30-year performance of ICT-regulated sandbox operations held at the Seoul government office.

Earlier, MOIN, a blockchain-based fintech startup, applied for regulatory sandboxes in the ICT sector last January. The startup requested to allow overseas remittance based on blockchain technology through cryptocurrency, and demanded to release the restriction on overseas remittance amount to about 30,000 U.S. dollars.

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It used the Stellar Lumen (XLM) cryptocurrency as a settlement medium instead of fiat money in the Stellar Network, a blockchain specialized in payment and remittance between countries – which is characterized by 50% lower fees than commercial banks.

However, the Ministry expressed the need for further review and consultation between related ministries, and finally decided to postpone the acceptance of the regulatory sandbox for the gathered services.

At the briefing, Jang Seok-young, the second vice minister of the Ministry of Science and ICT revealed that there are still major concerns about Bitcoin and other cryptocurrencies such as money laundering and crime utilization. The amendment to the Special Policy Act, which is pending in the National Assembly, includes the cryptocurrency exchange reporting system, money laundering and terrorist financing regulations.

Lee Jin-soo, Director of the Digital New Industry System Division, Ministry of Trade, Industry and Energy, also revealed that, the startup in question was put on hold at the 4th Deliberation Committee back in 2019, but it was withheld.  Adding that there are still concerns about money laundering and speculation. If the special law passes, the accountability of exchanges or cryptocurrencies will be clearer.

Moreover - as Coinidol recently reported - South Korea announced its plans of launching blockchain and DLT-based local currency which will be working in the same way like Bitcoin.