"The STO system can be changed by testing a special zone for regulating block chain"
“At present, I can’t say for sure whether this project could be a trigger for growth of the blockchain or crypto asset industry or an exceptional recognition—I think we’re at a crossroads of becoming both,” said Park Jong-baek, attorney at law firm Bae, Kim & Lee during a webinar “real estate funds and crypto finance” hosted by the Blockchain forum on Oct. 19. #Blockchain sandbox on two-tracks During the webinar, Park introduced cases of blockchain-based platforms for real estate transactions, in which local authorities also took part. Park first categorized the blockchain sandbox into two-tracks: the first is one is being selected as a financial innovation project under the Financial Innovation Support Special Act. Such projects are overseen by the central government. The second track is doing business within a “regulation-free zone” based on local law which ensures the project benefits the local community and contributes to increasing its autonomy as well. These two tracks are different in many ways, including the administrative office that oversees the project and the length of regulatory relief. Being selected as a financial innovation project requires approval from Korea’s finance regulators, but designation in a regulation-free zone also needs approval by the local government, the Ministry of Start-ups and a government committee reserved for regulation-free zone projects. The former offers regulatory relief for two years, but the length of the latter can differ by project according to how much time it was offered. #Sejong Telecom, a regulation-free zone example Park introduced the Sejong Telecom case which was selected as an operator inside Busan City’s blockchain regulation free zone in July. Sejong Telecom reported its service was a blockchain-based platform for investment and profit sharing in real estate. Once the funds are input on the system, that record would be left on the system and profit-making securities would be issued on the blockchain network. Through this, investors could trade these securities on the platform and the records would be left on the Korea Securities Depository. #Regulation-free zones at the crossroad According to Park, cases like Sejong Telecom raise meaningful questions on the blockchain regulation-free zone: Are they stepping stones of the blockchain growing into an industry of its own? Or are they merely exceptions in the industry’s early years? Cases like Sejong Telecom, if they turn out to be a success, can spur similar business models using different assets. But if the project doesn’t succeed in the next two years, regulators might turn away for good.