Korea Lifts Ban On Issuance Of Crypto Through Initial Coin Offerings (ICO)

08/30/2022

2 minutes read

2022.08.30 02:34

The central bank of the Republic of South Korea, or the Bank of Korea (BOK), has lifted its previously imposed ban on the issuance of cryptocurrencies through the Initial Coin Offerings (ICO).

According to local media reports, the Bank of Korea said that it was necessary to allow new issuance through ICO of crypto assets in Korea, while the bank emphasized the need for it to play a role in managing and overseeing crypto assets, or so-called stablecoins, as the monetary authority.

Through a Korean translation of the ‘European Union Crypto Asset Market Act (MiCA),’ the BOK said that Korea has been banning ICOs of crypto assets to protect users and investors. Nevertheless, there are no regulations on transactions through domestic exchanges, so domestic companies could establish a local corporation overseas to issue new crypto assets and then list them on a domestic exchange.

“When the Framework Act on Digital Assets is enacted in the future, it is necessary to allow domestic crypto-asset ICOs institutionally,” the BOK said. “It is possible to operate a system that approves transactions through a domestic listing of crypto-assets issued overseas so that relevant industry development and users and investors can be developed. The effect of making it possible to prepare a protective device is also expected.”

BOK Intends To Support Small Businesses

The central bank talked about supporting small businesses by applying minimum regulations for user protection to utility tokens, which are unlikely to be widely accepted as payment methods.

The BOK said, “a balanced approach is needed to foster a sound market through the introduction of a crypto asset regulatory system to promote blockchain and crypto asset innovation while not hindering the development of related industries due to excessive regulation.”

Recently, the city of Busan in South Korea signed an MoU with Binance to receive technological and infrastructure support from Binance for the development of the city’s blockchain ecosystem and promotion of the Busan Digital Asset Exchange.

In the case of the EU, the BOK said that it introduced regulations to protect users and investors while taking care not to hinder blockchain nurturing and innovation.

On the Flipside

The BOK said that so-called ‘stablecoins’ that could be used as a payment method would require sophisticated regulation at the European level. The BOK insisted, “when enacting the Framework Act on Digital Assets, it is necessary to ensure that the role and responsibilities of the Bank of Korea for stablecoins are specified.”

Why You Should Care

MiCA defines a token that is issued through a 1:1 exchange with money and gives the holder the right to redeem it as an electronic money token, and the existing ‘Electronic Money Act’ is applied as it is. The BOK pointed out that it is necessary to adopt MiCA-level regulations for stablecoins.

MiCA applies regulations to protect investors on crypto-asset service providers, such as exchanges, for crypto-assets whose issuer is not specified, such as bitcoin.