Earlier this week, mainstream media outlet News1 reported that Bithumb, South Korea’s biggest cryptocurrency exchange, is conducting an initial coin offering (ICO) later this year to launch its own cryptocurrency Bithumb Coin.
Some of the largest cryptocurrency trading platforms valued at billions of dollars such as Binance, Kucoin, and Huobi have already released their native tokens that can be used to trade cryptocurrencies and pay fees. On Binance for instance, users can benefit from lower fees in trading by using Binance Coin, and the company benefits from the funds it has raised through the ICO which are used to cover operational costs.
In an interview with News1, Bithumb revealed that Bithumb Coin will be released in two parts or types but the company has not disclosed any details about the structure or the purpose of its token. More importantly, Bithumb told News1 that it is not seeking to conduct a public ICO but rather a token sale targeted at institutional investors and large-scale investment firms.
Similar to most large-scale ICOs like Telegram, individual investors will only be permitted to participate in the token sale if they either join a big group of other individual investors or partner with institutional investors to purchase Bithumb Coin.
Earlier this year, Kakao, the largest internet conglomerate in South Korea that operates KakaoTalk, KakaoPay, KakaoStock, KakaoTaxi, and KakaoStory, five apps that have over 90 percent dominance in their respective industries including messaging, stock brokerage, ride-hailing, and social media, announced that it will likely conduct its ICO outside of South Korea due to the government’s ban on domestic ICOs.
Kakao suggested that it may permanently move its blockchain venture to Switzerland as a separate company to Kakao and simply manage it as a subsidiary. Kakao’s potential ICO and blockchain venture are expected to be worth billions of dollars and the relocation of Kakao’s blockchain firm to regions like Switzerland would negatively impact South Korea’s local blockchain sector.
Acknowledging the significance of Kakao’s ICO and the value of its blockchain venture, the South Korean Financial Services Commission (FSC) revealed–almost immediately after the rumors surrounding a potential ICO by Kakao were disclosed–that it may legalize domestic ICOs in the near future if taxation policies are in place.
“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,” one source told Korea Times.
Another source added that the government is primarily concerned with the tax aspect of token sales and as soon as it is resolved, domestic ICOs will be legalized. “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,” said the second source.
Bithumb is a public company that is operated by BTCKorea and it is required to publish all earnings, possessions, and balance sheet of both Bithumb and its subsidiaries. Conducting an ICO can become more complicated for Bithumb as a result and the company will not reveal any more information about its ICO until it is fully ready to conduct the token sale.
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Last modified: May 20, 2020 8:51 PM UTC