It a great news for crypto enthusiasts and traders of South Korea as the latest report coming out of the country says that the financial authorities could soon lift the ban on Initial Coin Offerings (ICOs) and allow domestic investors to participate in the decentralized process of fundraising. Now, that certainly a lot surprising considering the fact that the same country was planning for a blanket ban on crypto trading activities earlier this year.
An anonymous source told the Korea Times: “The financial authorities have been talking to the country’s tax agency, justice ministry, and other relevant government offices about a plan to allow ICOs in Korea when certain conditions are met.”
In September 2017 last year, South Korea’s financial watchdog – Financial Services Commission (FSC) has put a ban on the blockchain-based funding model with FSC vice chairman Kim Yong stating that ICOs were causing money to be “flooded into an unproductive and speculative direction.”
However, the administration has yet to frame any sort of ICO rules till date and it is found that despite the local ban, digital currency users are still found participating in International ICOs. Kang Young-soo, the regulator from Financial Service Commission (FSC) overseeing cryptocurrency trading policies has currently declined to comment other than ICOs while just stating that the agency is considering a “third party view”.
While talking at a recent industry forum, Young-soo admitted that FSC was currently exploring ways to using “advance blockchain-related technologies and effectively regulate crypto-trading”.
ICO is a decentralized way of fundraising used by new startups and companies wherein they offer investors their own digital currency tokens in exchange for fiats or other digital currencies. The ICO market which was initially heated-up in the first half of 2017 later witnessed a slowdown due to increasing reports of fraud and cheating.
After an unprecedented jump in trading activities last year, the South Korean government and authorities have been juggling their ways out to control the crypto mania sighting increased risks of money laundering and tax evasion. The authorities were also considering a blanket ban on crypto trading but the decision was later pulled back following huge uproar from the local investor community.
However, the government has initiated several measures in place like taking the local exchanges and investors for their earnings derived out of cryptocurrency investments. Also, in order to curb the menace of tax evasion, the country also banned trading through anonymous accounts on the exchanges and asked the investors to get themselves KYC verified to continue trading in the crypto market.
However, this has not stopped companies and investors from indulging in crypto-related activities. Recently, the South Korean technology giant Kakao Corp has announced plans of launching its own new blockchain network ‘Kakao blockchain’ along with its native cryptocurrency ‘Kakao Coin’ through an ICO. Due to restrictions currently imposed in the country, the company was planning to seek overseas jurisdiction. However, this news about lifting the ICO ban can certainly bring more cheer to Kakao Corp while putting its plans on a fast track.
However, for the ban to be lifted a combined effort needs to be made by the government and the banks in formulating the ICO laws and keeping the capital inflows in check.