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Crypto Regulation Halts Growth of S Korean Web3 Unicorns, Warns Professor

Tim Alper
Last updated: | 1 min read
A CPU on a circuit board, with the text “Web 3.0” placed above it.
Source: EZPS/Adobe

A leading South Korean professor says that restrictive crypto laws are stopping Web3 unicorns from growing in the nation.

The expert also claimed that banks and other financial market players should be allowed to move more freely in the crypto market.

According to EDaily, the Web3 comments came from Hoseo University Professor Kim Hyeong-joong, who also serves as the President of the Fintech Society.

Speaking at a Web 3.0 policy seminar this week, Kim said:

“Some 5% of the world’s unicorn companies are operating in the Web3 sector. But there are no South Korean companies among that number.”

The professor claimed:

“This is because the government banned financial institutions from holding cryptoassets while calming the [crypto] craze of 2017.”

This, he claimed, had led to a lack of venture capital investment in domestic Web3 companies.

A screenshot of the definition of the financial term “unicorn.”
Source: Investopedia/Screenshot

Domestic Web3 firms, said Kim, have been left “impoverished.” He blamed Seoul for “blocking growth” of all things crypto-related.

The professor pointed to CB Insights research published in April, which made note of the fact that there are currently 1,206 unicorn companies in the world.

Of this number, 63, or 5%, were identified as Web3 companies.

But no South Korean companies made this list, Kim stated, adding:

“While many Web3 unicorns are appearing around the world, South Korea is missing a precious opportunity.”

S Korean Banks Also Need Access to Crypto Markets, Professor Claims

Meanwhile, per ZDNet Korea, Kim also took aim at the government’s stance on crypto buying.

He noted that the Bank for International Settlements (BIS)-affiliated Basel Board of Banking Standards had unveiled a regulatory bill that would allow banks to hold up to 2% of their total assets in crypto.

But as of 2017, South Korean financial companies were banned from holding or investing in cryptoassets.

Kim said,

“If South Korean financial institutions do not learn to master newly emerging [financial] technologies, the future of the [domestic] financial industry will inevitably be bleak.”

South Korean lawmakers are hopeful of adopting a new crypto-related law that would oblige all crypto operators to keep their clients’ tokens in cold wallets.

The draft law also seeks to create a clear divide between central bank-issued coins and decentralized tokens.