The first phase of South Korea’s CBDC (Central Bank Digital Currency) trial has been successfully completed, as per an announcement from the Bank of Korea.
Following the issuance and distribution pilot, June 2022 is the potential date to start working with financial institutions to publicly distribute the digital won. One of these financial entities is Ground X – a subsidiary of Korea’s largest social network, Kakao – selected as the bank’s technology partner for the digital won simulations.
A simulation environment [will be] created in the cloud for the basic functions of the implemented CBDC (manufacturing, issuance, distribution, etc). Based on this, we plan to verify the possibility of implementing various additional functions (offline payments, etc) and applying new technologies, such as enhancing personal information protection.
Bank of Korea report
The bank emphasised that the digital won would not replace its fiat currency, rather it will be used as a “backup payment method” in situations where telecommunication companies experience failure.
Travel Rule Puts Pressure on Crypto Exchanges
South Korea has become the 14th nation to officially and successfully complete a CBDC pilot, following China, the Bahamas and Nigeria, to name a few.
The CBDC announcement comes after many South Korean financial entities have placed a lot of pressure on crypto exchanges following the Travel Rule, which requires exchanges, digital wallet providers and other crypto-related companies to share personally identifiable information (PII) for transactions over a certain amount.
On January 25, South Korea’s second-biggest exchange, Bithumb, had to suspend crypto withdrawals following pressure from the Korean Financial Intelligence Unit.
An odd sidelight to all this is that, as Crypto News Australia reported earlier this month, South Korean presidential candidate Lee Jae-Myung is using non-fungible tokens (NFTs) as part of his fundraising campaign.
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