Updated 21st January
South Korean bitcoin startup Korbit has announced that it will receive $400,000 in funding from various Silicon Valley investors.
If that figure doesn’t impress, the names behind it might. The list includes DFC founder Tim Draper, AngelList founder Naval Ravikant, SV Angel founder David Lee and Barry Silbert, founder of SecondMarket and a high-profile bitcoin advocate.
Draper said bitcoin’s growth in Korea has been remarkable, adding that Korbit is setting a good example for bitcoin companies around the world. He argues Korea could play a leading role in the future of global finance by capitalizing on innovations like bitcoin.
Korbit’s profitability
As it stands, Korbit is the biggest bitcoin exchange in Korea with more than 20,000 users. One of its competitors, Coinplug, also received $400,000 in funding from SilverBlue, another Silicon Valley investor and is currently developing a POS application for Korean merchants.
Korbit CEO Tony Lyu said the company is already profitable, but it needed strategic investors to grow its lead and improve global competitiveness.
“We’ll be spending the extra money on hiring great talent and improving our infrastructure,” he told CoinDesk.
“We’re working hard to fill the gaps in the bitcoin ecosystem here in Korea.”
The exchange was established just seven months ago and it has already received funding from a foundation for young entrepreneurs, formed by Korea’s banking alliance.
Last week Korbit started processing all operations in real-time and it claims to be the world’s fastest bitcoin buying platform, as users can sign up, pay, and withdraw their coins in under three minutes.
Regulation in South Korea
Although South Korea’s bitcoin economy is relatively small compared to that of China or Japan, the government does not appear to be interested in regulating or limiting the use of bitcoin.
Last month, the Korean Ministry of Strategy and Finance, the Bank of Korea, the Financial Services Commission and the Financial Supervisory Service issued a joint statement, saying that they would not recognise bitcoin and other digital currencies as legal tender.
At the time, the officials said bitcoin simply does not meet the conditions to be considered a currency and therefore it does not meet standard regulations governing online transactions.
Interestingly, Korbit managed to secure the funding deal thanks to its participation in a Silicon Valley summit last year, which was supported by the Korean Ministry of Science, ICT and Future Planning. In other words, it appears that the Korean government and its banks are supporting bitcoin startups, albeit indirectly.
Disclaimer: CoinDesk founder Shakil Khan is an investor in SecondMarket.