South Korea To Partly Lift Ban on ICOs

Lawmakers are working on a bill that would overturn the current ICO ban by year end

by -
04 May • 3.5 min
In Regulation

South Korean lawmakers are working on new legislation to reverse the government’s ban on Initial Coin Offerings (ICOs), local news outlet the Korea Times reported on Wednesday.

The efforts are being led by Rep. Hong Eui-rak of the ruling Democratic Party of Korea. Hong is reportedly working with at least 10 other representatives from the Korean government to draft a final bill before the end of the year.

"The bill is aimed at legalizing ICOs under the government's supervision," Hong said at a forum on ICOs and blockchain technology at the National Assembly in Seoul on Wednesday. He added that the bill was based on a joint study conducted by his office and the Korea International Trade Association (KITA). "The primary goal (of the legislation) is helping remove uncertainties facing blockchain-related businesses," Hong elaborated. 

Though the details of the proposed legislation remain unknown, the report suggests that the bill will not rule to completely open the market for ICOs. The intention is to allow token sales conducted by public organisations and research centres “committed to promoting and developing blockchain technology”. Government agencies including the Financial Services Commission (FSC), Korea’s financial regulator, and the Ministry of Science and Information and Communications Technology (ICT) will wield power to supervise these ICOs, the bill reportedly conveys.

In a statement to the Wednesday forum, National Assembly Speaker Chung Sye-Kyun underscored the lawmakers' role in removing political uncertainties facing cryptos and blockchain technology. “Blockchain and cryptos can be used in various public sectors for good causes. Given their potential, we need to work to help reduce political uncertainties they face,” he noted.

The forthcoming framework is the first parliamentary challenge to South Korea’s ICO ban, which was introduced in September last year to curb growing cryptocurrency trading speculation.

In a bid to evade restrictions in the country, some South Korean crypto exchanges are seeking to open branches abroad. ICON (ICX), which is being touted as the Korean version of to the popular Ethereum (ETH) cryptocurrency, was issued in Switzerland and started trading in March. Coinone, the number three crypto exchange in South Korea, also announced its plans to launch an exchange in Indonesia in June. South Korea’s major cryptocurrency exchange Bithumb also considers issuing its own digital coin in Singapore, local media reported earlier this month.

With local companies seeking fundraising overseas, South Korea is missing out on any benefit that comes with the potential market activity. Thus, rumors emerged in March that certain entities within the South Korean government were considering to reverse the ban on ICOs, as long as new offerings adhere to strict government standards.

South Korea is among the world’s most active crypto trading markets and has seen cryptocurrencies firmly permeating into Korean society among everyday adopters and retail investors. The Asian country accounts for about 12% of trading volumes globally, according to analysts at Citi.