In September 2017, amidst the boom of initial coin offerings (ICOs), South Korea’s financial regulator has banned raising money through all forms of digital currencies. That is, it banned ICOs indefinitely. According to the regulator, the measure was aimed at combating excessive speculation and financial crimes.
Although on some occasions it was speculated that the country could release initial coin offerings, this did not happen. So far.
This week, South Korea announced the approval of ICOs, reversing the 2017 ban. The decision is made by South Korea’s president-elect Yoon Suk-yeol, whose term begins on May 10. It included ICO approval among its 110 national tasks.
ICOs released in South Korea
The new government will prepare a two-way regulatory framework for ICOs. In addition, it will classify digital assets as bonds and securities.
The purpose of the bill is to manage the issuance and listing of tokens and prevent unfair commercial acts, according to the presidential transition committee.
Yoon’s administration included a plan to enact interim legislation called the Digital Asset Basic Act. It will contain guidelines on the issuance of digital assets, such as non-fungible tokens (NFTs), investor protection and stabilization of digital transactions.
The details of the plan include creating suitable “conditions” for investors who want to invest in “digital assets” with “confidence”.
In addition, the presidential transition committee added that a tax on crypto assets will be discussed. But that should only happen after legislation focused on investor protection is in place.
In terms of regulation, the committee said it will closely monitor the regulatory stance of international financial institutions such as the Bank for International Settlements (BIS) and US executive agencies.
The committee will also allow what it called “domestic ICOs,” but with safeguards for investors. More specifically, there would be two forms of ICOs, which would classify coins as “safe type” and “unsafe type” based on various factors.
“We will prepare conditions for users to invest safely, such as introducing an insurance system against hackers and system errors and recovering profits from unfair transactions,” said an official of the transition committee.
Now that the country is due to lift the ban, some large South Korean companies are expected to launch an ICO.
Earlier this year, SK Group, the country’s third-largest conglomerate, said it intends to issue its own token through a subsidiary company before the end of 2022.