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Korea's top three game developers likely to benefit from legislation on virtual assets They unlikely to need to establish overseas entities

Translated by Kim So-in 공개 2021-11-29 08:07:44

이 기사는 2021년 11월 29일 08:05 더벨 유료페이지에 표출된 기사입니다.

South Korea’s top three game developers – Nexon, NCSoft, and Netmarble – are expected to be the first to benefit from the country’s possible legalization of initial coin offering (ICO).

The country’s Financial Services Commissions (FSC) and the National Assembly National Policy Committee have been in talks to legislate a new law that puts the nation’s cryptocurrency industry under the institutional system, industry sources said on Thursday. They had two rounds of legislative discussions on November 17 and 23, but decided to discuss details at the next meeting.

Industry officials are paying attention to a report presented at the latest meeting, which contained requirements for ICO, disclosure obligations, white paper composition requirements, and accounting standards. Industry experts think that the government has effectively allowed an issuance of digital assets and ICO in the country.

The game industry is the most strongly related to the issuance of virtual assets. This is because the structure of the gaming business is intuitive and easy to distribute digital assets in the virtual space within the game and to build an economic system in which tokenized items are traded.

The top three game developers and other smaller game developers are considering entering the blockchain and non-fungible token (NFT) businesses, especially after the global hit of South Korea's first play-to-earn game, Mir4.

Existing digital coin issuers are operating through their overseas entities as Korean companies are not allowed to issue digital coins and promote ICO. Wemade, the producer of Mir4, also issues its cryptocurrency Wemix token through its second-tier subsidiary in Singapore. This is why Wemade has decided to exclude its Singaporean second-tier subsidiary from its merger with its subsidiary Wemade Tree.

Although the three top game companies have announced their plans to enter the NFT business, they will only be able to issue their own game coins and launch NFT-based games in the first quarter of 2022 at the earliest. If the Korean government legislates a crypto market-dedicated law in 2022 as expected, the game companies won’t need to establish overseas entities and carry out groundwork for crypto issuance through the entities.

The report also said that existing digital coin issuers that completed ICO through their overseas entities will still be subject to the same obligations as firms that issue crypto assets in Korea.

The government’s possible permission for domestic game companies to service play-to-earn games in Korea will also be a boon for the big three game companies as they have the largest number of intellectual properties which have the greatest dominance over domestic users. More than half of the top 30 Korean gaming apps on Google Play Store are developed by the three game companies, with NCSoft’s four games – Lineage W, Lineage M, Lineage 2M, Blade & Soul 2 – ranked in the top five. (Reporting by Sang-woo Seong)
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