The South Korean government has no other choice but to legalize initial coin offerings (ICO) and representative Hong Eui-rak of the ruling Democratic Party of Korea has obtained the support of 10 lawmakers to challenge the current ban on domestic ICOs.
Multi-Billion Dollar Opportunities
The economy of South Korea has only recently started to improve from its previous years and considering the positive talks the administration of President Moon Jae-in has had with the North Korean authorities over the past week, the economy of South Korea is only expected to grow in the long-term.
In 2017, the South Korean government put an end to rumors surrounding a shutdown of the local cryptocurrency exchange market proposed by the country’s justice minister Park sang-ki. The Blue House, the executive office of President Moon, emphasized in an official announcement that the government will never ban cryptocurrency trading and instead regulate the cryptocurrency sector with practical policies to protect investors and facilitate the growth of businesses.
Although the Financial Services Commission (FSC) and local authorities permanently moved away from discussions to ban trading, it banned investors from funding domestic ICOs. The motivation of the government in outright banning domestic ICOs remains unclear but the FSC hinted that it was to restrict speculation within the market by removing extremely volatile assets such as tokens from the market.
As we reported however, Rep. Hong and a team of 10 lawmakers are challenging the government’s ban on domestic ICOs. The bill released by Hong allows companies to run public ICOs, given that they receive the approval from the Financial Services Commission and the Ministry of Science and ICT.
“The bill is aimed at legalizing ICOs under the government’s supervision. The primary goal (of the legislation) is helping remove uncertainties facing blockchain-related businesses,” Hong added.
Why are Authorities Hurrying the Legalization?
Earlier this year, a source within the South Korean government told The Korea Times that the government will legalize ICOs as soon as taxation policies regarding token sales are approved. The report was releasd almost immediately after the FSC expressed its concerns towards the intent of the country’s largest technology conglomerate and biggest cryptocurrency exchange Bithumb to launch ICOs outside of South Korea.
“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,” said one source.
If Kakao and Bithumb decide to launch ICOs in Switzerland with the companies they have already established in the country, the blockchain sector of South Korea will lose out on multi-billion dollar opportunities and simply pass them onto Switzerland, solely due to the country’s ban on domestic ICOs.
Local analysts have stated that the hurried approach of the government to legalize domestic ICOs stem from its opposition against local companies conducting ICOs outside of the country, which could lead to major losses for the cryptocurrency market and blockchain sector of South Korea.