Min Byung-Doo, a member of the country's governing Democratic party and the chairman of Korea's National Policy Committee, has strongly encouraged the government to legalize initial coin offering (ICO) and impose better crypto-related regulatory frameworks to legitimize the local market.
“Regulation is not bad. Regulation is necessary, it is the only way to legitimize the market and allow investors to build trust towards the cryptocurrency market,” chairman Min said.
In his statement at the National Assembly of South Korea meeting, chairman Min emphasized the importance of embracing new technologies and acknowledging new trends in the global finance and technology space.
He explained that the successful $1.7 billion ICO of Telegram and $4 billion token sale of Block.One / EOS have demonstrated increasing interest and demand for ICO projects, which the country cannot dismiss.
“The government cannot dismiss ICO. It needs to allow companies to conduct ICO. ICO has become a new trend in the global market and it is the responsibility and ability of the government to embrace new technologies,” he said, adding “We can see that the flow of investment is clearly changing compared to ICO and angel fundraising. The ICO has raised $1.7 billion for Telegram and $4 billion for Block.One, It is getting bigger and bigger."
Previously, Choi Jong-ku, the chairman of the Financial Services Commission (FSC), prevented Kakao, the biggest Internet conglomerate in South Korea that has over 80 percent market share over local fintech, messaging, ride hailing, social media, and online stock trading industries, from conducting an ICO in South Korea.
As the conglomerate established a company in Switzerland to conduct an ICO overseas, FSC chairman Choi stated that the country could consider the ICO to be an illicit fund raising method.
“Even if there is no prohibition on cryptocurrency or digital asset trading, there is a possibility that it [Kakao ICO] may be regarded as fraud or multi-level sales according to the issuance method. Since the risk is very high in terms of investor protection, the government has a negative stance on the ICO,” chairman Ku said.
Ultimately, Kakao and Bithumb, the second biggest cryptocurrency exchange in South Korea, scrapped their plans to conduct token sales.
Based on the success of Telegram and EOS, the ICO of Kakao could have garnered similar interest from the global cryptocurrency sector. Considering the potential of the ICO market and local blockchain initiatives, chairman Min asserted that the government should regulate and legalize ICOs in the short-term.
"Let the government, the National Assembly and the blockchain association quickly create a working group to block fraud, speculation, money laundering and develop the block-chain industry,” he said.
Currently, the National Assembly is awaiting to approve or reject the first crypto and blockchain-related legislation of South Korea, which if approved would consider digital asset exchanges as regulated banks and blockchain projects as legitimate entities.
The initial introduction of the legislation led the majority of investors within the local market to be optimistic about the long-term growth of the market. With the forward-thinking approach of chairman Min, South Korea is expected to see major changes in local regulatory frameworks surrounding the cryptocurrency market.
National Assembly image from Shutterstock.