South Korea Planning to Lift Ban from ICOs Under New Regulations
As the South Korean regulatory agency and other government bodies are working to bring several regulations in place, the latest report suggests that the country might consider lifting the ban on ICOs and allow them to function under a new set of regulations.
As reported by the Korea Times, a source anonymous with the matter said: "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.”
Initial Coin Offering (ICO) is a decentralized way of fundraising used by startups and businesses to raise capital. During last September 2017, the Korean government has put a complete ban on ICOs saying that this form of digital assets was neither money, nor currency of any sort of financial assets. The country’s regulatory body - Financial Service Commission (FSC) at that time said that ICOs were causing money to be “flooded into an unproductive and speculative direction.”
However, in spite of a ban, the Korean administration has yet to bring any rule in place. The country still allows local investors to put their money into foreign ICOs and crypto exchanges operating in the country.
Kang Young-soo, who looks after the crypto trading policies at the Financial Service Commission declined to comment anything except saying that the agency is currently pursuing a “third-party view” whether to allow ICOs in South Korea to businesses and local investors. "There are many speculating about the possibility of allowing ICOs. The FSC has acknowledged a third-party view regarding the issue, but there's nothing that we can say officially at the moment," Kang said.
On the other hand, he also confirmed that the agency was exploring ways to “advance blockchain-related technologies and effectively regulate crypto-trading.”
Another source familiar with the country’s tax code expects that as South Korea fixes the laws and legal framework for crypto-trading, the order banning the ICOs can be possibly reversed. The source said: "Various scenarios such as the imposition of value-added tax, a capital gains tax, or both on trade; and the collection of corporate tax from local cryptocurrency exchanges, as well as the initiation of authorized exchanges with licenses are being discussed.”
The source also said that the decision to allow ICOs should be made in consultations with local banks, the finance and justice ministry, tax agencies and thus create more transparency.
Due to a tremendous increase in crypto trading activities last year, the South Korean government is seen taking several regulatory measures sighting issues of tax evasion and money laundering. Earlier this year, the South Korean government also announced its decision to ban crypto-trading using anonymous and unknown accounts.