ICOs Soon Legal in South Korea
According to a recent study conducted by a group of Morgan Stanley researchers, the top five countries in terms of crypto trade volume are Malta, Belize, Seychelles, the US and South Korea.
Yes, South Korea, in spite of the fact that ICOs are still banned in the country.
Among the contributing factors, the researchers quoted low taxes, although regulatory certainty was at the forefront. What this means is that businesses need to know what to expect – i.e. they can get by even when current regulations are unfavourable, as long as they are predictable.
For South Koreans though, if recent reports are to be trusted, the crypto regulations will not stay unfavourable for much longer.
In an article published by The Korea Times on May 2, a group of Korean lawmakers is currently drafting a bill that would legalize new ICOs.
South Korea ICO Bill
The move to legalize ICOs in South Korea is led by Rep. Hong Eui-rak, a member of the ruling Democratic Party, alongside 10 other legislators. If the legislators have their way, ICOs will become legal later this year.
Hong said that this was only the “first parliamentary challenge” and that the bill stems from a “joint study by his office and the Korea International Trade Association (KITA).”
Although the bill should make ICOs legal, it does have its caveats. First of all, not all ICOs will be legalized – only new ICOs launched under the supervision of the government.
While the primary goal, in Hong’s own words, is to help “remove uncertainties facing blockchain-related businesses,” this doesn’t mean that unlimited and unrestricted ICOs will suddenly become legal. Instead, the bill will provide support to research centres and public organizations which have a lot to contribute to the development of blockchain technology.
Furthermore, the ICOs will be subject to strict supervision and oversight even after they are approved – both under the Ministry of Science and ICT and the Financial Services Commission (FSC).
South Korea ICO Ban Background
ICOs in Soth Korea have been banned since late September/early October of 2017, soon after China imposed its own ban.
Even then, it was obvious that the ban would not be permanent. It was more like a panic call – a blanket ban to stop the volcano from erupting. Most experts agree that the government needed time to develop a strategy and to gather the necessary resources after the 2017 boom had caught them by surprise.
So, banning ICOs and (as some suggested, digital assets altogether) for good was never part of the equation. The financial authorities planned to unban ICOs as long as certain conditions were met.
Be that as it may, the ban may have had some major consequences. A lot of South Korean companies have already moved overseas, opening offices in Japan, Singapore, Hong Kong, and even Switzerland.
The silver lining? Although the current bill will likely allow only ICOs initiated by research centres and public organizations, this is apparently only the first step, with all compliant ICOs to follow suit soon after.