[Op-Ed] Global Blockchain-Powered Hit Games Shift Overseas Amid Tough Korean P2E Regulations

P2E Regulation Has Already “Weakened Industrial Competitiveness” and Is Now Causing “Outflows of National Wealth and Talent Abroad”

Game companies that had been operating in Korea are turning overseas one by one to avoid government regulation. The game industry combined with blockchain technology is emerging as a promising global field, but the government has imposed a blanket ban on its distribution. Criticism continues that regulations related to Korea’s game industry fail to grasp global trends.

The games targeted by government regulation are P2E games. P2E (Play to Earn) games are a new type of game incorporating blockchain technology. Goods and items obtained through gameplay are recognized as NFTs (non-fungible tokens), allowing individuals to own them or convert them into cryptocurrency.

In Korea, the distribution of P2E games is impossible due to regulation under the Game Industry Promotion Act. This is because the Game Rating and Administration Committee (GRAC) considers in-game NFTs becoming privately owned assets to be legally prohibited “prizes.” The courts have also agreed with GRAC’s judgment that providing NFTs constitutes a prohibited act under the Game Industry Promotion Act and may encourage gambling-like behavior. Under current law, P2E games cannot receive a rating classification, and their domestic service is therefore blocked.

The game industry argues that the government’s regulation of P2E games is excessive. Its position is that refusing to grant rating classification to P2E games is overregulation, given that the cash value of items and game assets is already recognized through external exchange sites. There is also growing concern that because domestic regulations fail to keep pace with global trends in the game industry, the competitiveness of Korean firms will deteriorate.

Korea’s game industry is targeting overseas P2E game markets to avoid government regulation. Most countries other than Korea and China do not regulate P2E games, leaving open the possibility of market entry. Even if Korean companies want to conduct business based in Korea, they have no choice but to establish corporations overseas if they want to apply P2E mechanisms. Major Korean game companies such as Netmarble and SkyPeople are already offering P2E game services aimed at overseas markets that cannot be used in Korea.

Unlike overseas markets, regulating the distribution of P2E games only in Korea is expected to cause many problems. If the current situation continues, with companies that had been active in Korea moving abroad, Korea’s game industry will fall behind global trends. It will also become difficult to expect the economic growth and job creation effects that would come from the growth of the domestic industry. Korea’s P2E regulation will not only “weaken industrial competitiveness” but also lead to “outflows of national wealth and talent abroad.”

Regulations on P2E games should be eased to promote the development of Korea’s game industry and address the problem of national wealth flowing overseas. The game industry combined with blockchain technology is emerging as a promising global field. Accordingly, rather than regulating the P2E game market, policy should move in the direction of easing regulation so that the industry can freely secure competitiveness and grow.

Hyojae Hong, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 블록체인 기술 결합된 세계적 유망 게임 국내규제 심해... P2E 해외로 이동

Author: Hyo-jae Hong

Date: 2024-04-18

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=26564