South Korea loses billions of dollars but extends ICO ban

This week, the government of South Korea officially decided to maintain its existing blanket ban on domestic initial coin offerings (ICO) in a move that could benefit other major crypto markets in Asia. On Friday, the virtual currency task force of the Office for Government Policy Coordination released a comprehensive report on the ICO industry. Local financial authorities stated that the government considers the ICO model to be a high-risk investment vehicle in many areas. As such, the government will continue to reinforce a ban on domestic crypto token sales.

Currently, based on existing policies in South Korea, local investors are permitted to participate in token sales conducted outside of the country. Throughout the past 12 months, the government said that firms abused the regulatory loophole by establishing paper companies in overseas markets. To circumvent the strict ban on local ICOs, firms based in South Korea have created entities in regions like Japan and Switzerland to conduct token sales. The financial authorities emphasized that local companies which initiated token sales in overseas markets could still face regulatory issues in South Korea if the companies targeted local investors.

In its recently released report, the Office for Government Policy Coordination said that at least 22 domestic firms have initiated token sales outside of the country. South Korea could miss out on multi-billion dollar opportunities with its recent ban on ICOs. Some of the country’s largest companies including Kakao planned to conduct crypto token sales in the past. Kakao reportedly is the process of initiating a private token sale in Japan worth hundreds of millions of dollars.

Why South Korea Had to Ban Crypto ICOs and Risk Losing Multi-Billion Dollar Opportunities, CCN, Feb 04