South Korea is preparing a policy plan for ICOs, or initial coin offerings, opening the door for Korean companies to raise funds on the crypto-crazed market despite the government’s prior reservations, The Korea Times reports.
“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,” reported the Korea Times citing an unnamed source.
Should the plan go through, it would mark a stunning policy about-face following the decision to ban ICOs last year, when South Korea’s Financial Service Commission (FSC) vice chairman Kim Yong-beom warned that ICOs were causing money to be “flooded into an unproductive and speculative direction.”
But South Korea did not enforce its ICO ban and South Koreans remained eligible to invest in foreign ICOs, the Times says. The government has also developed interest in the emerging blockchain technologies that support cryptocurrency transactions, prompting steps to reverse measures taken to crackdown on cryptocurrencies, which are extremely popular in South Korea.
Kang Young-soo, head of the FSC’s cryptocurrency division, acknowledged that the country’s financial regulator had engaged a “third party view” but declined to confirm on the specifics of the policy. He also admitted that the FSC was exploring plans to “advance blockchain-related technologies and effectively regulate crypto-trading” at a recent industry forum.
ICOs are a form fundraising that allows investors to purchase stakes in a new startup in cryptocurrency, often in digital tokens related to the company’s services, rather than in traditional currency. But initial ICO investors are often individuals rather than corporate institutional investors, as in traditional initial public offerings, while the recent proliferation of ICOs has increased the risk of fraud, according to the U.S. Securities and Exchange Commission. ICOs are also banned in China.
A potential new ICO policy follows other steps to loosen South Korea’s tight restrictions on trading Bitcoin and other cryptocurrencies. Last month, the government announced it was considering a formal licensing system to help regulate the country’s virtual currency exchanges, which it had last year entertained shuttering outright over fears that the overheated market was also being used to launder money and evade taxes.