South Korea’s Financial Services Commission Believes in Maintaining Ban on ICOs

Siamak Masnavi

On Thursday (11 October 2018), Choi Jong-koo, the chairman of South Korea's top financial regulator, the Financial Services Commission (FSC), reaffirmed the Korean government's negative stance on Initial Coin Offerings (ICOs).

According to a Reuters report, on 29 September 2017, the FSC said that it would ban raising funds through ICOs, a move that was reminiscent of China had done on 4 September 2017. After a meeting with the Ministry of Economy and Finance, the central bank (the Bank of Korea) and the National Tax Service, the FSC issued a statement that said “stern penalties” would be given to any parties involved in issuance of ICOs.

Then, in August 2018, as reported by Business Korea, South Korea's National Assembly started holding discussions on whether the ban on ICOs should be removed, although the National Assembly Research Service (NARS) had "already released a report noting the need to clarify the legal definition of cryptocurrencies before allowing ICOs."

According to Business Korea, at a parliamentary inspection session of the FSC held at the National Assembly on October 11th, the FSC chairman said:

"The government does not deny the potential of the blockchain industry. But I think we should not equate the cryptocurrency trading business with the blockchain industry... 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.”

As for the criticism that commercial banks are refusing to give out real-name accounts to some crypto exchanges, Choi said: "Exchanges should be able to persuade banks to issue bank accounts to them.”

On the same day, The Korea Herald reported that Hong Nam-ki, chief of the Office for Government Policy Coordination had said on (during a parliamentary audit session) on October 10th:

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

Featured Image Courtesy of the Financial Services Commission