South Korea Loosens Grip on ICOs
Initial coin offerings (ICOs) will not be banned in South Korea after all, according to a recent decision by the central government. Although the market will still be governed by strict regulations, institutional players will have the opportunity to invest in the burgeoning market.
ICOs Will Not Be Banned
South Korean newspaper Chosun reported Friday that the government is looking to regulate the ICO market and will allow institutional investors to participate in the controversial crowdfunding model. Chosun revealed that several government agencies have formed a task force to sort out a regulatory framework for ICOs. They include the Ministry of Strategy and Finance, Financial Services Commission, Fair Trade Commission, Financial Supervisory Commission and Ministry of Justice.
The task forces are investing the possibility of taxing cryptocurrency investors, as well as implementing Know Your Customer (KYC) and Anti-Money Laundering (AML) policies for institutional investors. These protocols have already been adopted elsewhere and currently form the basis of the Simple Agreement for Future Tokens (SAFT) protocol.
A task force spokesperson 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.”
That being said, South Korea will still keep a tight lid on public access to ICOs, with the spokesperson clarifying that only institutional investors will be able to enter the market.
The spokesperson added: “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.”
South Korea has adopted a fairly laissez faire approach to cryptocurrency, which has made the Asian nation a prime destination for traders. The South Korean yuan is the third most traded fiat currency involved with cryptos, behind only the Japanese yen and U.S. dollar. South Korean exchanges were at the center of the latest bitcoin rally that took prices north of $19,000.
Last month, South Korea’s Financial Supervisory Service (FSS) said it had no plans to monitor cryptocurrency exchanges. According to FSS head Choe Heung-sik, “supervision will come only after the legal recognition of digital tokens as a legitimate currency.”
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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