South Korean Kakao Messaging App Announces Blockchain Subsidiary Plan

South Korean communications firm Kakao has announced its intention to launch a new blockchain subsidiary, as part of its drive to leverage blockchain technology within its core business.

The tech firm, which runs the leading Korean messaging app Kakaotalk, suggested a dedicated subsidiary was in the cards, to be set up specifically for work in developing blockchain technologies and applications for use in its core business.

In support of the move, the company is also reported to be weighing up an initial coin offering, which could look to raise capital against an initial issue of tokens. The tokens could ultimately be used by Kakao Talk users, and by other customers across the Kakao suite of services.

If the ICO becomes reality, the move could be seen as a followup to a similar venture by messaging app Telegram, which has to date reportedly raised over $850 million through the launch of tokens to be used within its own infrastructure.

It is likely that any initial offering would leverage the services of the new blockchain subsidiary, while the new unit also develops fresh applications for blockchain tech across Kakao’s product range.

However, the company may face some difficulties in staging an ICO, given recent South Korean restrictions on ICO activity. New laws were introduced in South Korea in September 2017 to prevent South Korean companies from promoting or engaging in ICO activity, which would limit the possibilities open to Kakao in its home market. 

Representatives from the firm refused to be drawn on the reported details of their plans, confirming only that they are aiming to create a blockchain arm.

Still, if the reports are to be believed, the plans could represent an ambitious move from the firm to capitalize on the ICO trend, and to maximize the benefits of integrating blockchain technology within its services to customers.

Kakao is no stranger to working with blockchain technology, including an earlier arrangement with local exchange Upbit, allowing Upbit users to transact through Kakao’s chat platform.

The firm is also thought to be considering other potential applications of the technology, following in the footsteps of international social messaging competitors like Telegram and Kik.