- The ban on domestic ICOs will remain in place
- The Korean government reiterates its support for the blockchain industry
- Government recently pledged ($207 million) by 2022 to distribute to about 10,000 blockchain startups
The crypto community in South Korea will have to wait a while longer to participate in Initial Coin Offerings (ICOs). The government’s financial regulator has restated its firm stance on ICOs.
Risk of financial fallout
The chairman of South Korea’s financial watchdog the Financial Services Commission (FSC) Choi Jong-ku during a parliamentary audit said Initial Coin Offerings was still too risky. However, Jong-ku reiterated that the government is still promoting the blockchain industry, even though it will still maintain strict regulations on cryptocurrency exchanges. Jong-ku told the parliamentarians:
“Although many people call for the government to allow initial coin offerings, there are still uncertainties related to such a move as well as the possibility of serious fallouts.”
Korean regulators joined regulators in China and other countries and banned all domestic ICOs in September 2017 and banned margin cryptocurrency trading. The watchdog said an “intensive crackdown” would ensue, with “stern penalties” issued on parties involved in ICO offerings.
Following public outcry, the government of South Korea said in February its aim was only to “prevent any illegal acts or uncertainties,” while responding to a public petition against what residents called a “harsh regulation.” The minister of the office for government policy coordination Hong Nam-ki responded then:
“The government’s basic rule is to prevent any illegal acts or uncertainties regarding cryptocurrency trade, while eagerly nurturing blockchain technology.”
ICO ban receiving push back
Members of the Korean National Assembly, the government’s legislative arm has been pushing for the removal of the ban on domestic Initial Coin Offerings and there were reports from as early as March 2018 that the ban would be lifted.
The BusinessKorea publication reported in May 2018 the National Assembly had officially made a proposed legislation to allow ICOs on condition that investor protections were provided for.
A special committee recommended the formation of a task force to create improved transparency of cryptocurrency trade in South Korea and help in creating a “healthy” cryptocurrency trading industry. The committee stated:
“We will also establish a legal basis for cryptocurrency trading, including permission of ICOs, through the National Assembly Standing Committee.”
While the financial regulator remains adamant on ICOs, South Korea’s Ministry of Science and Information Communications Technology (ICT) promised government support for the local blockchain industry. Pledging to raise 230 billion won ($207 million) by 2022 to distribute to about 10,000 blockchain experts and 100 startups besides encouraging the development and commercialization of six blockchain startups the ministry is already supporting.