Last week, The Korea Times, a mainstream media founded by the country’s largest newspaper Hankook Ilbo, reported that sources within the government revealed the plans of local financial authorities to legalize initial coin offerings (ICOs) in the future.
“The financial authorities have been talking to the country’s tax agency, justice ministry and other relevant government offices about a plan to allow ICOs in Korea when certain conditions are met,” an unnamed source told The Korea Times who asked to remain anonymous due to the sensitivity of the subject.
Concerns regarding investor protection
Most recently, Choi Jong-ku Financial Services Commission (FSC) chairman expressed his concerns towards domestic ICOs, citing high risks involved for investors within the cryptocurrency market.
In a conference held at the Seoul Government Office, FSC chairman Choi stated that the agency still remains skeptical towards the investor protection policies in place. Choi’s statement translated by Cointelegraph reads:
“There is a possibility that during the creation and issuance of a new digital currency through an ICO, various Ponzi schemes and scam operations may emerge. The agency will remain its negative stance towards the investor protection policies currently imposed on the local cryptocurrency market.”
Still, despite the concerns over investor protection by the FSC, several sources within the government told The Korea Times that local financial authorities are attempting to authorize domestic ICOs by enabling strict Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, as well as a taxation policy for investors.
US SEC and South Korea on the same page
In essence, the South Korean government is willing to allow companies to conduct ICOs as long as the token sales are registered with the government, which is similar to the viewpoint of the US Securities and Exchange Commission (SEC).
In December 2017, the US SEC stated that while private ICOs can be conducted within the US targeting local investors, they must be registered with the SEC. As of December, the SEC stated that there were no ICOs registered with the agency and that no ICOs are allowed to accommodate US-based investors.
“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation. Investors should understand that to date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies,” the SEC said…