The Bank of Korea has announced the winner of the tender among technology providers for the state cryptocurrency. According to the Korea Herald, South Korea’s central bank has selected Ground X, a subsidiary of national tech giant Kakao Corp., to participate in a government-owned cryptocurrency pilot program. Ground X participated in the tender with Line Plus, a subsidiary of Naver, and SK C&C, a division of the SK Group.
Ground X launched the Klaytn blockchain platform in 2019 and recently signed a technology partnership with ConsenSys. ConsenSys is working with central banks in Singapore, Australia and Thailand on government cryptocurrency projects.
Kakao will also be responsible for the verification of unregistered investments
South Korea’s central bank has offered the company a 10-month partnership deal. As noted above, the bank has requested technological support for the development of the central bank’s digital currency. It has placed this responsibility in the hands of Kakao. Which will also validate unregistered investments as NFT tokens on its public blockchain.
An unregistered investment is the same investment in company shares, however, they not traded on the open market. So they are usually sold over the counter [OTC], which is not legal. These shares usually offered prior to the public offering.
Interestingly, South Korea’s OTC market is booming. This can only be judged by the K-OTC exchange, which at the end of 2020 recorded a record high market capitalization of $ 1.1 billion.
The rise in OTC trading is a sign of crypto enthusiasm among the public. However, the authorities decided to stop this activity and force the exchanges to comply with the requirements. This has greatly affected many small exchanges, which already faced difficulties in finding banking partners. But now many of them are counting on the final closure. In fact, even large exchanges like Bithumb are struggling. So, Bithumb forced to sever ties with foreign exchanges.
While these steps taken to prevent major stock exchanges from going bankrupt, there is currently a risk that they simply will not be able to register with the Korea Financial Intelligence Unit. Since banks are all wary of crypto-businesses.
However, the Bank of Korea plans to close this deal with Ground X of Kakao Corp. by the end of this month. Due to the fact that the launch of the pilot project, and accordingly the first tests, will most likely begin next month.
Pilot CBDC project will be held in two stages
As part of the tender from the Bank of Korea, Kakao Corp. will receive $ 4.4 million to develop a test model of the state cryptocurrency. It will implement the program in a “virtual environment” in two stages.
The first phase dedicated to researching and testing the main role of the digital won. And it will complete by December. In the second phase, various concepts will be worked out in detail, for example, privacy protection. The completion of the second stage scheduled for June 2022.
Note that the central bank initially announced plans for the country to test the distribution of digital won back in February.