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South Korean central bank takes “U” turn over ban on issuing cryptocurrency via Initial Coin Offerings

On August 29, the Central Bank of the Republic of South Korea lifted its recently enforced ban on issuing digital currencies through Initial Coin Offerings (ICO).

As per Local media reports, the Bank of Korea expressed that it was important to allow the issuance of crypto assets through Initial Coin Offering in Korea. 

Moreover, the bank also highlighted the requirement for it to play a crucial role as a monetary authority in managing and regulating the crypto assets or stablecoin.

On August 29, through the Korean translation of the ‘European Union Crypto Asset Market Act (MiCA), the bank expressed its view and said to safeguard the investors and users, Korea has been prohibiting ICOs of crypto assets.

Nevertheless, through domestic exchanges, there are no strict regulations on the transactions and their effectiveness has been reduced, as domestic exchanges form local legal entities overseas like Singapore and Switzerland and elsewhere, to issue new crypto assets and list them on local exchanges like Bithumb.

Further BOK said, “in the future when the Framework Act on Digital Assets is established, it is important to allow domestic crypto-assets ICOs institutionally.” It is feasible to operate a system that authorizes transactions through the domestic listing of foreign-issued crypto assets, thereby enabling the development of related industries and user and investor protection. It is also anticipated to prepare a protective device.”

The central bank discussed supporting small companies by applying the most minor guidelines for client security to utility tokens, which are probably not going to be broadly accepted as a mode of payment.

BOK further said, “To promote crypto asset innovation and blockchain by introducing crypto asset regulatory framework, a balanced approach is needed to cultivate the market without hindering the advancement of the crypto industry by heavy regulation.”

Notingly, to take technological as well as infrastructure help from Binance, Busan city signed an MoU with Binance for the advancement of the city’s blockchain infrastructure and promotion of the Busan Digital Asset Exchange.

By seeing the EU regulations, BOK said to protect the investors and users, the EU has introduced regulation without blocking blockchain innovation and nurturing.

Moreover, BOK said to use stablecoin as a payment method at the European level, it would need sophisticated regulation. The BOK demanded, “while establishing the Framework Act on Digital Assets, it is important to ensure that role and responsibilities BOK are specified for stablecoin.”

MiCA characterizes a token on a certain basis like the current ‘Electronic Money Act’ is applied as it is, it is issued with ratio of 1:1 exchange with cash and gives the holder the right to reclaim it as an electronic money token. The BOK called attention to the fact that it is important to take on MiCA-level guidelines for stablecoins.

MiCA applies guidelines to safeguard investors on crypto-asset service providers, like exchanges, for crypto-resources whose issuer isn’t determined, for example, bitcoin.

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