South Korean National Assembly Proposes Legislation to Lift ICO Ban
Yesterday, Korean news outlet Business Korea reported that South Korea’s National Assembly has proposed official legislation and new policies to allow domestic ICOs (initial coin offerings). The National Assembly is the legislative branch of the South Korean government. Last September, South Korean regulators banned all domestic ICOs on the grounds that they are a “violation of capital market law.”
The ban resulted in a mass exodus of domestic companies participating in ICOs to countries with less stringent regulations, such as Singapore and Switzerland. Business Korea commented on this phenomenon: “With the government failing to present any guidelines for ICOs, domestic blockchain companies are going to Singapore and Switzerland to do an ICO and pay unnecessary expenses.”
Back in March, there were some rumors circulating that South Korea may reallow ICOs, though this is the first definitive action that has been taken to accomplish that. The National Assembly believes that ICOs are an acceptable practice so long as investors remain protected in the same ways they are for more traditional investments.
On Monday, the National Assembly’s Special Committee of the Fourth Industrial Revolution was held, where new legislation and policies regarding the topic were determined. The committee described some of their regulatory needs surrounding the cryptocurrency environment:
“We need to form a task force including private experts in order to improve transparency of cryptocurrency trading and establish a healthy trade order. . . . We will also establish a legal basis for cryptocurrency trading, including permission for ICOs, through the National Assembly Standing Committee.”
Beyond cryptocurrency trading and ICO regulation, another main focus of the proposed legislation is to support and protect firms developing and utilizing blockchain technology so that innovation is not stifled. On this point, the committee criticized the Korean administration for “neglecting its duty in responding to blockchain application expansion.”
In the blockchain and cryptocurrency space, regulatory hurdles are definitely the main obstacle to the evolution and adoption of the technology. South Korea’s efforts to ease regulations and develop a fair regulatory framework for the technology is a step in the right direction.