Busan, aiming to establish the world’s first city government-operated exchange by the end of 2023, is advancing towards this goal despite a tight schedule. The city has recently taken a significant step by selecting a preferred bidder for its operating tender.
The chosen entity is the Busan BDX Consortium, a group consisting of 11 diverse companies, including IT firms, financial institutions, and other local businesses from Busan.
Leading the consortium is ITcen, a company specializing in tech infrastructure and IT technology, which boasts a market capitalization of approximately $123 million.
In this competitive tender, the consortium emerged victorious over other contenders, including the prominent gaming company WeMade, known for the WEMIX crypto asset. A notable factor in this decision, as reported by the newspaper Kookje Shinmun, may have been the controversy surrounding WEMIX. The media outlet stated:
“Although Wemade’s market capitalization is so large that it cannot be compared to ITcen, it is believed that the [controversy] surrounding WEMIX may been a factor.”
Last year, South Korea’s top five crypto exchanges unanimously agreed to delist WEMIX following concerns about anomalies in its token circulation data. However, all but one of these exchanges have since reinstated the coin, leading to a split in industry opinions.
Some experts suggest that Busan’s decision to partner with local firms may have been influenced by a desire to collaborate with companies that have a substantial presence in the city and a deep understanding of its unique industrial ecosystem.
Moving forward, the Busan City Council is set to vote on the launch of the new platform. Following this, it’s expected that the consortium will enter into a business agreement with the city in January.
The exchange operator is poised to assume complete responsibility for the operation and ownership of the exchange, including funding for exchange facility costs.
On the other hand, the city plans to offer both administrative and financial support to ensure the successful functioning of the exchange.
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What Will Busan’s Digital Exchange Trade?
Initially, Busan had plans to develop the exchange as a platform for trading both cryptocurrencies and securities token offerings (STOs). However, regulatory challenges have led to the postponement of plans to trade crypto assets.
The government’s hesitation to legalize STOs, despite previous commitments, has caused frustration among major domestic companies eagerly awaiting approval to commence their services.
As a result, the platform will start by focusing on tokenized commodities, including precious metals. Additionally, it will manage tokenized intellectual property rights and tokens and certificates related to carbon emissions.
City Outlines Long-term Plans
Busan has expressed intentions to “broaden the transaction scope” on its planned platform in the long run. An industry insider, choosing to remain anonymous, shared their perspective on the situation:
“As we are late to the market, we need to come forward with competitive products. But it is disappointing that the exchange will not be able to trade virtual assets and STO are missing.”
Meanwhile, another expert highlighted the importance of handling substantial transaction volumes for exchanges to thrive, stating:
“In a situation where private players are booming, [Busan] will fall behind the competition if it fails to build stable technology and come up with attractive products.”