The ICO ban in South Korea is likely to be lifted

Back in 2017, when crypto started gaining mainstream traction, the Korean government imposed several strict restrictions. Per regulators, the ban was prompted by crypto’s high volatility and speculation, and illegal activity in the country.

Alongside, the collection of virtual currency was also banned in the country. The main objective of implementing the same was to manage and monitor digital assets. However, as of the latest developments, it appears that the ban on initial coin offerings may be on the way out.

End of ICO ban?

In a recent statement, the Central Bank of Korea came out in favor of policy changes. Via the proposed framework law for digital assets, the bank has proposed that there is a need to institutionally allow local cryptocurrency ICOs for traded digital assets. Per local media Infomax,

“Bank of Korea argued that it was necessary to allow new issuance (ICO) of cryptoassets in Korea.”

When the ban was in place, the likes of Kakao and Hyundai Group had launched coins via foreign affiliates before listing them on domestic exchanges. Now, however, the proposed regulation will bring clarity to the sector and companies will be able to choose the indigenous route.

The bank said in its statement:

“In the future, when the Framework Law on Digital Assets is adopted, it is necessary to institutionally allow domestic cryptographic assets ICOs. The effect of making it possible to prepare a protective device is also expected.”

Clarity aside, the bank revealed that the purpose of the regulation was to protect consumers and improve the transparency of crypto-related transactions. However, BOK does not want to tread the excessive regulation path. Elaborating on the same, it highlighted that a balanced approach was necessary to promote a healthy market. It further intends to promote blockchain and cryptoasset innovation without impeding the development of related industries.

Apart from Korea, it is quite known that the EU had been working with the crypto asset markets [MiCA] frame since 2020. And lately the same got a nod from the members of parliament. As previously reported, major stablecoins will be subject to strict operational and prudential rules, with restrictions if they are widely used as a means of payment, and a cap of 200 million euros in transactions/day.

In addition, stablecoins will have to maintain reserves to cover all claims and provide redemption rights to their holders. The reserves must be legally and operationally separate and isolated in the interest of the holder and they will be fully protected in the event of insolvency.

Read more: Did Terra’s fall affect the EU’s MiCA regulation?

Drawing parallels to the same, the Bank of Korea said,

“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 Korean market mood

Koreans, for their part, have taken advantage of the choppy state of the market. From 1.37 on August 25, the Kimchi Premium Index’s reading has risen to 3.2, indicating the increasing buying pressure in the Korean private equity market.

Keeping an eye on this index’s reading over the next few days will give us an insight into how market participants perceive the proposed changes.