The top financial regulator of South Korea doesn’t believe that cryptocurrencies and initial coin offerings (ICOs) have positive connotations. During the parliamentary audit sessions of the Financial Services Commission (FSC) at the National Assembly on Oct. 11, the regulator clarified that it believes in the power of blockchain but doesn’t equate it with digital currencies.
What Does the FSC Believe?
Choi Jong-koo, chairman of the FSC, noted that the government is a firm believer in the potential of the blockchain industry and added:
“But I think we should not equate the cryptocurrency trading business with the blockchain industry.”
The chairman went on to say that a lot of people think that the government should allow ICOs in the country. However, according to him, these initial coin offerings bring “uncertainty and the damage they can cause is too serious and obvious,” because of which many foreign countries have also banned ICOs.
With these statements, Choi Jong-koo has indicated his continued negative stance on the ICO industry. One of his primary concerns with ICOs is lack of investor protection. Choi further commented that some commercial banks are not providing real-name accounts for some cryptocurrency exchanges. He noted that these exchanges must be able to convince banks to issue them bank accounts.
ICOs in South Korea
ICOs were banned in the country a year ago as these offerings were considered to be “almost a gamble.” It was noted that several cryptocurrencies sell for a premium in South Korea, sometimes as high as 30 percent. The country then imposed several strict rules on the cryptocurrency industry, including making real-name trading compulsory for users.
South Korea is expected to clarify its stance on digital currency offerings by November. If Choi’s comments should be considered a predecessor of the policy, we can expect some kind of crackdown on the industry next month. The government has also conducted a survey with blockchain companies to help finalize its stance on ICOs.
The cabinet ministers also agreed to exclude all brokerage and sale of blockchain-based assets from venture business classification in September. The move was undertaken to protect citizens from “illegal activities” done in the name of digital assets.