South Korea May Change Policy and Allow Domestic ICOs

The ban on participation in digital coin offerings might be lifted, Korean newspaper reports.

by Kalina Tekelieva
09 March • 3.5 min
In Regulation
South Korea’s financial regulator is working on a plan to revise the ban on initial coin offerings (ICOs), The Korea Times reported on Thursday, quoting anonymous sources.
 
Not many details about the move are clear, but according to the publication, a source familiar with the issue disclosed that the Korean financial authorities had been discussing the plan with the country’s tax agency, justice ministry and other relevant government offices. If implemented, the decision will give green light to ICOs upon “certain conditions”, the unnamed source said. What these conditions are, though, remains unspecified.

The Korea Times, a major English-language daily in the country, spoke also with Kang Young-soo, responsible for cryptocurrency trading policies at the Korean Financial Service Commission (FSC), who was quoted as saying:
 
“There are many speculating about the possibility of allowing ICOs. The FSC has acknowledged a third-party view regarding the issue, but there’s nothing that we can say officially at the moment.”
 

Current ban on ICOs

If put into action, the new plan will represent a shift from the current South Korean policy. In September 2017, the Korean government decided to prohibit domestic companies and startups from taking part in any blockchain funding rounds.
 
However, the ban has not been enforced yet and Korean cryptocurrency investors have been able to invest money in foreign crypto-markets, The Korea Times claims.

cryptocurrency prices exchange

Earlier this year, Korea banned the use of anonymous bank accounts in cryptocurrency trades. The new measure, seeking to combat money laundering activities, became effective on January 30.
 
Whether, against this background, the Korean financial regulator will eventually decide to allow domestic investors to participate in domestic ICOs, is yet to be decided, Young-soo said.
 
Initial coin offerings are a form of fundraising for new digital currency ventures. ICOs are preferred by some startups, as they allow for a bypassing of banks and venture-capital firms. At the same time, unlike initial public offerings (IPOs), coin offerings don’t provide investors with ownership in the start-up they are giving money to.

Third-largest crypto-market

Although no official statement has been made so far, the revision of the Korean cryptocurrency policy reportedly being planned, has attracted a lot of media attention. The topic is especially relevant in light of the huge popularity of virtual currencies in the country.
 
According to a research by Coinhills, Korea is the third-biggest Bitcoin market in the world, behind Japan and the US. Moreover, Korean news agency Yonhap quoted a recent survey, which stated that more than two million Koreans own a cryptocurrency, people in their 20s being the most active participants.