Many consider Initial Coin Offerings (ICOs) dangerous and as they receive harsh criticism by regulatory bodies from multiple countries. However, it seems that South Korean lawmakers might be planning on legalizing them through a new bill.
South Korea is one country that bans ICOs, but things might change if the new bill materializes or becomes law. The task of compiling the ICO bill is the responsibility of 10 lawmakers led by Rep. Hong Eui-rak of the country’s Democratic Party. The pipeline bill reportedly aims to provide legal status to ICOs. This will only happen if they meet various stipulated conditions and are also under government supervision.
The announcement points toward a reversal of the Initial Coin Offerings ban which was announced in September last year by South Korea’s Financial Services Commission. South Korea was one of the countries that banned ICOs alongside China, Singapore and the U.S among others. The ban was based on various concerns. Those include lack of a legal framework as well as the association of ICOs with fraudulent activities.
South Korea’s decision to warm up to ICOs is a great step forward for blockchain startups and the cryptocurrency market. This decision could lead to the launch of new cryptocurrencies in the country while also encouraging blockchain-related startups to set up shop in South Korea. However, the announcement seems to be focusing on ICOs and there was no mention of how it will affect the use of cryptocurrency in the country.
The bill is reportedly based on a joint study carried out by the Korea International Trade Association (KITA) and Rep. Hong. The government’s decision to legalize ICOs highlights the fact that South Korea is acknowledging that ICOs present a new an interesting approach to crowdfunding, but one that needs regulatory guidance.
If the bill is passes into law, blockchain startups will be able to seek funding through ICOs, although it does not mean that just anyone can launch an ICO. Chances are that only research centers and public organizations will receive clearance to launch cryptocurrencies through ICOs. Such a strategy will allow regulators in the country to eliminate fraudulent ICOs, thus making sure that investors obtain protection.
Scammers have previously used ICOs to con people and rob them of their hard earned cash. This was possible due to the lack of regulation. However, governments are now taking action to make ICOs safer.