Korean Government Expected to Announce ICO Stance in November, Official Says

Korean Government Expected to Announce ICO Stance in November, Official Says

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The South Korean government is expected to announce its position on initial coin offerings in November, according to a high-ranking official. The decision will follow the outcome of the survey which the country’s Financial Supervisory Service recently sent out to domestic blockchain companies.

Also read: RBI Argues Supreme Court Should Not Interfere With Its Crypto Decision

ICO Stance Expected in November

Korean Government Expected to Announce ICO Stance in November, Official SaysHong Nam-ki, Chief of the Office for Government Policy Coordination, conveyed during a parliamentary audit on Thursday that “The Korean government is likely to announce its stance on the much–disputed status of initial coin offerings [ICOs] in November,” the Investor reported.

He explained that a survey on ICOs has been sent to local blockchain companies by the country’s Financial Supervisory Service (FSS). The FSS is responsible for setting some policies on cryptocurrencies including anti-money laundering measures. The aim of the survey is “to gather their [survey recipients] views on the current legal framework” for ICOs, the publication added. “We did the survey as some companies are conducting or preparing for ICOs despite the ban here,” Hong clarified and was further quoted saying:

We have had several discussions (on ICOs)…Once the survey results are in by end-October, we plan to finalize the government’s stance.

Money Today also quoted him reaffirming, “I intend to form a government position on ICOs next month.”

The South Korean government banned all forms of ICOs in September last year but has yet to introduce any law governing them. This has caused a number of Korean blockchain companies to launch their tokens abroad, providing the opportunity for domestic investors to continue to invest in ICOs.

Korean Government’s ICO Survey

Korean Government Expected to Announce ICO Stance in November, Official SaysThe ICO survey sent by the FSS has troubled businesses that received it, according to local media. Questions in the survey concern any ICO projects companies may be involved with or are planning to engage in, including reasons to issue tokens and their methods of distribution, the Korea Economic Daily reported.

While the FSS says that the survey is not mandatory and that it only seeks “to understand the exact situation of the industry, not for sanctions,” companies are reluctant to disclose certain information since ICOs are currently banned in the country, the publication noted. An official of a company that received the survey told the news outlet:

We have decided [that it’s] our internal policy to respond to [the survey due to] the concerns that it may be disadvantageous to be listed on the [government’s] blacklist if it is declined.

FSC’s Current ICO Stance

Meanwhile, the Financial Services Commission (FSC), South Korea’s top financial regulator, has reaffirmed its stance on ICOs for the time being.

Korean Government Expected to Announce ICO Stance in November, Official SaysFSC Chairman Choi Jong-ku.

“The government does not deny the promise of the blockchain industry,” FSC Chairman Choi Jong-ku was quoted by Yonhap saying on Thursday. However, “I do not think it is necessary to equate the virtual currency business with the blockchain industry,” he said, elaborating:

Many people say ICOs should be allowed, but ICOs’ uncertainty remains, and damage is too serious and obvious.

Choi also emphasized the need for more crypto exchanges to use the real-name system that the government implemented in January. The regulator aims to convert all crypto trading accounts to real-name ones. However, banks have only been providing the real-name conversion service to the country’s four top crypto exchanges: Upbit, Bithumb, Coinone, and Korbit. All other exchanges continue to use their corporate accounts which the regulator says are prone to money laundering.

“We have to convince the banks,” Choi asserted, recognizing that currently “commercial banks do not give real-name accounts to some virtual currency exchanges.”

What do you think the Korean government will announce in November? Let us know in the comments section below.


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Why Investors are Highly Optimistic in Acquisition of Korea’s Largest Crypto Exchange

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On October 12, CCN reported that BK Global Consortium, the parent company of Singapore-based BK Medical Group, has acquired a 50 percent stake in Bithumb, South Korea’s largest crypto exchange.

Kim Byung-gun, a prominent plastic surgeon and blockchain investor, finalized the deal between BK Global Consortium and Bithumb, officially acquiring the leading cryptocurrency trading platform at a valuation of $350 million.

Investors Highly Optimistic in the Deal

For many years, despite three high profile security breaches that have led to the loss of tens of millions of dollars in user funds, Bithumb has been able to secure its position as the most dominant digital asset trading platform in South Korea alongside Upbit.

In late 2017, Dunamu, a subsidiary of Kakao, the largest Internet conglomerate in the country that has over 80 percent market share in fintech, payments, online stock brokerage, ride-hailing, and messaging, launched Upbit to compete against Bithumb and Korbit.

Currently, Upbit is engaging in a tight competition against Bithumb, often demonstrating a higher daily trading volume possibly due to its listing of more than 100 cryptocurrencies.

But, the sophisticated platform of Upbit, that has been audited several times for transparency and investor protection, has not been enough to overtake Bithumb and its loyal user base.

Korea Bitcoin

The majority of investors in South Korea remain highly optimistic in the acquisition of Bithumb by BK Global Consortium because with the deal, now every major cryptocurrency exchange in the country is operated by large-scale conglomerates.

Upbit is run by Kakao, Gopax is run by the country’s largest commercial bank Shinhan, Korbit is run by $15 billion Nexon, and Bithumb is operated by BK.

One commonality amongst major cryptocurrency exchanges operated by leading multi-billion dollar conglomerates is that none of the platforms have experienced security breaches and successful hacking attempts. Korbit, Upbit, and Gopax have not been hacked in their entirety, because of their focus on security and investor protection.

For conglomerates in South Korea, it is of utmost importance to protect their name value and brand image due to the psychology of local investors. More often than not, when a local conglomerate begins to demonstrate a downtrend and loses the support of local consumers, it fails to survive in the long run.

With the involvement of BK, investors are anticipating a re-established focus on security, internal system management, and overall improvement in investor protection, which will help legitimize the cryptocurrency exchange market of South Korea.

Prior to the acquisition of Bithumb by BK, the publicly listed exchange was owned and operated by a talent agency and a couple of non-finance related businesses, which led investors to speculate that the exchange was being forced to maximize profits at the cost of security and system stability.

What Investors Can Expect Next

Binance and Upbit have recently announced their plans to expand to the cryptocurrency exchange market of Singapore, subsequent to the decision of the government to provide stable banking services to crypto-related businesses and develop the local blockchain industry.

Given the strong connections of BK with the Singaporean market, investors are expecting Bithumb to expand its services to Singapore in the months to come.

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South Korean Financial Regulator Reaffirms Negative Stance on ICOs and Crypto

The chairman of Korea’s Financial Services Commission Choi Jong-koo has reaffirmed his negative position on digital currencies and Initial Coin Offerings (ICOs), Business Korea reported Oct. 11. Choi spoke at a parliamentary audit session of the commission held at the National Assembly.

South Korea prohibited ICOs in September last year, stating that such a type of fundraising is “almost a gamble.” This August, Korean lawmakers, including participants from government ministries, returned to the cryptocurrency issue, focusing on repealing the country’s ICO ban. Lawmakers agreed on the need to develop a related policy before carrying a resolution on ICO reallowance.

At the recent session, Choi reportedly said that “the government does not deny the potential of the blockchain industry,” while noting that it “should not equate the cryptocurrency trading business with the blockchain industry.” Choi said:

“Many people say the Korean government should allow ICOs, but ICOs bring uncertainty and the damage they can cause is too serious and obvious. For these reasons, many foreign countries ban ICOs or are conservative towards them.”

Choi also addressed criticism of commercial banks that refused service to crypto exchanges, stating that “exchanges should be able to persuade banks to issue bank accounts to them.”

Other officials have said that the South Korean government is “likely” to announce its official position on ICOs in November. The Chief of the Office for Government Policy Coordination Hong Nam-ki said that the government will announce its position once it finalizes its discussion and receives the results of a government survey.

Hong told Korean business publication the Investor that the government launched a survey of blockchain companies to gather their views on the current legal framework.

In September, South Korean cabinet ministers agreed to exclude all sale and brokerage of digital assets based on blockchain technology from venture business classification. The move was reportedly taken in order to “strengthen the cooperation of related institutions” and to protect citizens from the “illegal activities” related to the digital assets business.

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Source: Cointelegraph

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