While a rumor is circulating that the Korean government will give the green light for companies to launch initial coin offerings (ICOs) later this year, the Financial Supervisory Service (FSS) still remains ambiguous on the matter.
In a seminar on the financial technology (fintech) industry held on April 25, an FSS official said Korea should make a decision on ICOs after taking into consideration the problems that would occur when they are legalized.
The official analyzed the positions that major countries take on ICOs, noting that wide differences exist among countries. He stressed that Korea should act after taking into account the regulatory approaches of foreign countries.
He also justified a prudent approach by indicating the potential adverse side effects, such as financial fraud committed under the guise of ICOs.
According to the FSS, the daily cryptocurrency trade volume in Korea amounted to around two trillion won as of April 23, accounting for 8.9 percent of the global transaction amount. Korea’s cryptocurrency trade volume is out of proportion to its share of global per capita GDP, which stands at 1.6 percent.
One main reason for the brisk cryptocurrency trade in Korea is that investors who are tired of investing in low-interest products are willing to invest in high-risk, high-return products. The high smartphone penetration rate in Korea and people’s ability to quickly adapt to new information technology also contributed to expanding the cryptocurrency market.
Meanwhile, a rumor has been circulating in the cryptocurrency industry that the Korean government will lift the ban on ICOs in November this year.
The rumor has it that the Financial Services Commission (FSC), which sets financial policies, will present a new regulatory framework for the financial industry in September that will allow ICOs within the bounds of the relevant laws and regulations. A detailed guideline, the rumor says, will be presented in November.
Currently, there are no laws and regulations that clearly ban ICOs. Yet the Korean government regulates them as a type of illegal fund-raising business. To permit ICOs, the government first needs to clearly define cryptocurrencies and ICOs. Industry officials say that the government should throw away its ambiguous attitude and decide on whether to allow or ban ICOs.