A draft for operating Jeju Blockchain Hub City has been made public. Jeju is planning to write the draft in details to designate Jeju as a special zone through the central government by end of this year.
Although changes are still needed until it is completed with its final draft, its initial draft includes various standards and ways to regulate cryptocurrencies and cryptocurrency exchanges.
According to ‘Method of Operation of Jeju Blockchain Hub City’ obtained by The Electronic Times, method of operation includes ways to exempt visit of foreign experts in South Korea and to improve relevant systems for international exchange.
First, it specifies introduction of investment and immigration system for foreigners who have contributed to creating jobs and investments. It also states that Jeju is going to form a system for sharing information with companies that set up foreign crypto-valleys and that there needs to be a blockchain cryptocurrency committee for maintaining legal system.
Jeju is going to follow current tax standards that occur from business relocation and profits and it expects that it can secure various tax revenues and create jobs as a result.
The draft states that designation of special zone can be done through revision of Jeju Special Act and systems for special zones. It also states that there needs to be a separate committee with the central government since there needs to be legal foundation.
Jeju also presented cryptocurrency standards within special zone. It is going to separate cryptocurrency into stock-type cryptocurrency and non-stock-type cryptocurrency and emphasized that there needs to be legal system and negative regulations.
Stock-type cryptocurrency is a cryptocurrency that can have its value change by a third-party. The report indicates that stock-type cryptocurrencies should follow Capital Market Act and Stock Trading Act.
On the other hand, non-stock-type cryptocurrency does not have its value change by a third-party or simple sale of rights. The report indicates that these cryptocurrencies must follow laws related to product trading.
Jeju stated that issue of cryptocurrencies within special zone must be allowed stepwise.
After allowing cryptocurrencies that have relatively low risk and have low influence on individual investors, it is going to start allowing other cryptocurrencies afterwards. It announced that information must be made public to protect investors and that cryptocurrencies that do not share information must be regulated.
Its plan is to allow cryptocurrencies centered on institutional investors first, cryptocurrencies that protect investors second, and finally allow entire cryptocurrencies. Private ICO (Initial Coin Offering) and reverse ICO centered on institutional investors are the ones that will be allowed first.
Public ICO applied with escrow and investor protection device and private ICO that follows regulations are the ones that will be allowed next.
In the end, every public ICO that follows regulations will be allowed to be issued.
However, the report emphasized that there needs to be ICO project registration system and regulations that require information to be made public to protect investors. It presented a project examination committee composed of domestic and foreign experts as an alternative.
The report also includes ways to regulate cryptocurrency exchanges.
It includes a draft for guidelines for enhancing management.
Companies that enter special zone for cryptocurrency and blockchain are obligated to take security measures, apply safe management methods, prohibit transactions involving ledgers, prevent money laundering, prevent embezzlement, protect user rights, and follow additional standards.
The report asks for establishment of international registration standards and guarantees activities of cryptocurrency exchanges that exceed such standards first.
The draft states that there needs to be a ‘cryptocurrency supervision center’ within special zone to register, manage, and supervise cryptocurrency exchanges.
“We are going to hold many discussions with the central government so that our plans can be fulfilled.” said Noh Hee-seop who is the director of Jeju’s Future Strategy Bureau. “We are going to continue to update our plans for operating Jeju Blockchain Hub City.”
Staff Reporter Gil, Jaeshik | osolgil@etnews.com