Is South Korea Reconsidering its ICO Blanket Ban?

Is South Korea Reconsidering its ICO Blanket Ban?

Last September China and South Korea both banned ICOs. Since then, China has largely shown no sign of regret in its decision. Indeed, if anything it has intensified its anti-crypto stance.

Already this year Chinese authorities have taken action against Initial Mining Offerings (IMOs) and given further assurances to their citizens that they will continue to fight the ICO model wherever they find it.

Recent comments by central bank governor Zhou Xiaochuan suggest that, whilst the Chinese government concedes that digital currencies are “technologically inevitable,” they are in no rush to compete with Switzerland as an ICO-friendly territory.

Balancing Prudence and Productivity

South Korea, on the other hand, has never seemed quite so sure of where it stands regarding ICOs and cryptocurrencies.

Though domestic ICOs are banned, no steps have been taken to prevent Korean citizens from investing in overseas offerings, and Korean companies frequently mount their ICOs from other territories like Singapore and Hong Kong.

The South Korean government is particularly concerned about the need to balance the potentially destabilising effects of the new technology with the need to stay economically productive and not fall behind.

According to local news agency Business Korea, the Financial Supervisory Service (FSS) is exploring ways of promoting blockchain technology within the country. Options discussed included greater participation in international conferences and putting government money into blockchain projects.

For Park Sung-joon, who heads the Blockchain Research Center at Dongguk University, there is another, more radical option: allowing ICOs, at least in some form.

He dismissed the 14 billion won (US$13.15 million) promised by the government as “a ridiculously small amount of money,” particularly when “other countries are seeking to research and develop the technology by raising hundreds of millions of won through an ICO.

ICOs to be Reinstated in post-Tax Reform Period?

The Korean Times has reported that there is some support for this position, even within the government itself. A source told the newspaper that “financial authorities have been talking to the country’s tax agency, justice ministry and other relevant government offices” over whether ICOs might be allowed, provided “certain conditions are met.

These conditions are likely to include a new tax framework allowing the government to collect tax revenue from cryptocurrency exchanges.

Kang Young-soo of the Financial Service Commission (FSC) acknowledged that there was widespread speculation on the possible reinstating of ICOs, and though he wouldn’t be drawn into revealing government policy, he did admit that “the FSC has acknowledged a third-party view regarding the issue.