Bank of Korea calls to end the country's ICOs ban to promote innovation
(Kitco News) - Signs of a global shift in the regulation of cryptocurrencies continue to emerge, with the Bank of Korea (BOK) being the latest financial institution to reevaluate its stance on crypto after signaling that it may soon start to allow initial coin offerings (ICO) in the country.
According to a story first reported by the South Korean news outlet Infomax, statements released by the BOK suggest that it is essential for the country to begin allowing domestic ICOs to launch so that the crypto industry in the country can keep pace with the rest of the world.
“When the Framework Act on Digital Assets is enacted in the future, it is necessary to institutionally allow domestic crypto-asset ICOs,” the BOK said while also citing the European Union Crypto Asset Market Act (MiCA).
Text in the MiCA notes that excessive regulation could stifle the issuance of digital assets, which the BOK highlighted as a reason to allow ICOs. The bank also recommends supporting the innovation efforts of small businesses by applying only the minimum regulations to utility tokens, which are less likely to be as highly adopted and used as payment tokens.
The BOK pointed out the fact that since “there are no regulations on transactions through domestic exchanges,” domestic corporations have resorted to establishing an entity overseas to launch a new crypto asset product. Those companies then list those newly created tokens on exchanges located in South Korea, effectively performing a workaround to the ban.
To combat this, the BOK is now recommending a regulated process that would allow these companies to list their tokens domestically.
"It is possible to operate a system that approves transactions through the domestic listing of crypto-assets [...] so that relevant industry development and users and investors can be developed,” the BOK said.
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The overall goal is to introduce regulations that protect users and investors but do not hinder blockchain innovation in the country.
“A balanced approach is needed to foster a sound market through the introduction of a crypto asset regulatory system to promote blockchain and crypto asset innovation while not hindering the development of related industries due to excessive regulation,” the BOK stated.
The Digital Asset Framework Act was proposed with the intention of bringing greater clarity to the crypto sector in South Korea by addressing issues such as ICO registration and the regulation of stablecoin platforms like Terra Luna, which have become a potent force in the crypto ecosystem. “In Korea, recently, considering that users suffered a lot from the Luna-Terra incident, it is necessary to adopt MiCA-level regulations for stablecoins,” the BOK said.