The second-largest city in South Korea, Busan, stated on Thursday that it would abandon its earlier plan to pursue a city-backed cryptocurrency trading platform in favor of launching a digital commodities exchange in the second half of this year.
According to a press release from the Busan city administration, its market would tokenize commodities using blockchain technology, enabling traders to invest in expensive products like real estate, gold, and intellectual property.
Tokenizing the intellectual properties of video games and movies will launch the exchange. The port city is particularly well-known for the G-Star video game exhibition and the Busan International Film Festival (BIFF).
In February, the city plans to create a legit corporation and start conducting technological tests. A date still needs to be provided, but the city stated that it intended to eventually broaden the exchange’s offerings to include all blockchain-based digital assets.
The exchange delayed its plans to provide services linked to cryptocurrencies and security token offerings last year to avoid potential conflicts with local regulators, according to a story published Wednesday by the local news website Busan Ilbo.
Busan has been working to develop its city-backed digital asset exchange since last August, when it signed partnerships with Binance, Gate.io, Huobi Global, Crypto.com, and FTX.com (just before its bankruptcy). However, the steering committee’s members were kept secret in December, with the exception of Huobi, which joined through its South Korean subsidiary.
A representative for the city of Busan told a news outlet over the phone that the partnerships are still in place.
The city formed a steering committee in December comprising 18 blockchain professionals, but none of the five exchanges were included in the proposal. Instead, the exchanges had agreed to help the city build up its first exchange for digital assets.
According to the sources, this steering committee is a recognized advisory group tasked with offering recommendations on setting up and running the digital asset market and expanding the system of external collaboration.
The declaration was made in response to previous crypto industry failures of centralized exchanges. Given the sequence of events, it is expected that the collapse of the FTX market influenced the Busan authorities’ decision to remove centralized exchanges from the plan.
Busan was declared a regulatory-free zone for blockchain technologies in July 2019. As a result, the city intends to incorporate blockchain-embedded apps into numerous sectors like public safety, banking, tourism, and logistics.
The government has been actively moving forward with its blockchain initiatives, including its blockchain-based digital currency, since 2019.