According to a report by Chosun, a leading mainstream news publication in South Korea, the South Korean government is planning to allow initial coin offerings (ICOs) in the near future, with strict regulations and policies in place.
ICO Will Not be Banned For All, Open For Institutional Investors
Chosun’s exclusive report revealed that the South Korean Ministry of Strategy and Finance, Financial Services Commission, Ministry of Justice, Fair Trade Commission, and Financial Supervisory Commission, have formed a task force that will focus on drafting various regulatory frameworks for businesses and investors in the cryptocurrency industry.
Specifically, the task force will actively investigate into the possibility of taxing bitcoin investors, imposing stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) policies, and allowing institutional investors to participate in ICOs.
A spokesperson of the task force told Chosun:
“Currently, the task force is considering imposing stricter regulations for investor and consumer protection within the cryptocurrency market.” The spokesperson added “in regards to ICOs, the government will likely impose regulations to enable institutional investors to invest in ICOs.”
But, even in the long-term the spokesperson emphasized that it is not possible to allow the public to invest in ICOs. “It is not possible to allow any citizen of South Korea to invest in ICOs. However, the government may allow institutional investors that meet capital requirements established by the Financial Supervisory Commission.
Despite the current state of the global ICO market, which is composed of many fraudulent projects and campaigns with no substance, as Ethereum co-founder Vitalik Buterin admitted, ICO as a crowdfunding method is a phenomenal way for any startup or project to raise capital from a decentralized ecosystem on a peer-to-peer (P2P) basis.
Limiting ICOs to accredited traders and institutional investors undermines the concept and the purpose of ICOs. Hence, excessive regulations targeted at ICOs could result in startups rejecting ICOs as a viable method of crowdfunding and return to the traditional venture capital system.
South Korean Government Will Go With the Flow
Previously, the South Korean government did not intend to regulate its cryptocurrency industry, because that would lead the public to believe that the government has accepted and embraced the cryptocurrency industry as a well-regulated and legitimate market.
But, the South Korean government has changed its stance over the past few weeks, primarily due to the rapid rise in demand for bitcoin and other cryptocurrencies in the South Korean market. A government official told Chosun in an exclusive interview that the South Korean government will try to follow the roadmap of other governments and leading markets such as Japan and the US, to provide a better ecosystem for both cryptocurrency businesses and investors.
“The South Korean government has no other choice but to follow the regulatory frameworks and trends established by other leading governments. While there certainly exists a negative reputation attached to the cryptocurrencies, the government’s stance is to allow what has to be allowed, for the benefit of the South Korean market.”