The Bank of Korea has urged financial regulators in the region to lift the long-standing ban on initial coin offerings (ICOs). The apex bank has also buttressed the need for more regulatory oversight on stablecoins issuance in the region, reports Yonhap Infomax on August 29, 2022.
Bank of Korea Urges Regulators to Reverse Ban on ICOs
South Korea’s apex lender, the Bank of Korea (BOK), has made it clear that it is necessary to allow blockchain projects and institutions to conduct initial coin offerings (ICOs) in the country since the current ICO ban has only served as a motivation for Korean startups to launch their digital tokens abroad and list them on local Korean exchanges like Bithumb.
It will be recalled that South Korea’s financial watchdog, the Financial Services Commission (FSC), joined forces with the Bank of Korea and the National Tax Service to outlaw initial coin offerings earlier in 2017, due to an increase in scam ICO projects in the region at the time.
“Raising funds through ICOs seems to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well,” said the regulators at the time, while also making it clear that organizers of ICOs will be made to face stern punishments.
Unlike China, which has completely banned all things Bitcoin and blockchain-based virtual currencies, South Korean authorities have allowed digital assets trading to continue in the state, with regulators choosing to tread the path of regulation rather than an outright ban.
Korea Set to Finally Legalize ICOs
While there have been reports in the past that the government was making plans to overturn the blanket ban on ICOs, nothing has been done until now. However, last March, Yoon Suk-Yeol, South Korea’s newly-elected president promised to put an end to the longstanding ICO ban, while also promising to implement amenable crypto policies.
As reported by crypto.news on August 12, 2022, Kim Joo-Hyun, the chairman of the FSC revealed plans to fast-track the formulation of crypto regulations in the state. At the time, the official made it clear that the FSC had set up a task force made up of experts from both the private sector and government agencies to look into the issue of crypto taxation and regulation.
Now, the BOK has urged the authorities to ensure that the proposed regulations will make provisions for new token issuance by institutions through ICOs. The central bank said:
Korea has been banning ICOs of crypto assets to protect users and investors. Nevertheless, there are no regulations on transactions through domestic exchanges, so domestic companies, etc, established a local corporation overseas to issue new crypto assets and then listed them on domestic exchanges.
In the future, when the Framework Act on Digital Assets is enacted, it is necessary to institutionally allow domestic cryptographic asset ICOs.
The BOK has also buttressed the need for the implementation of EU-level regulations on stablecoin issuance in the region, to ensure consumers are completely protected against unfortunate incidents such as the recent Terra stablecoin and Luna token collapse.