While any legislation is far from set in stone, a group from within the South Korean government has made substantial progress in rallying lawmakers into reversing their all-out ban on initial coin offerings. Led by Rep. Hong Eui-rak, a group of ten individuals from the South Korean Democratic Party spoke at an ICO conference held at the National Assembly this past Wednesday to propose a bill that would lift ICO restrictions and, instead, put the development and operation of new digital coin offerings under the regulatory purview of the federal government.
News of this proposed legislation is positive for the cryptocurrency community as a whole, but more importantly, it is incredibly auspicious for South Koreans, who have a well-established history of being enthusiastic investors in the crypto space. In order to understand this enthusiasm, one needs only look at the percentage of Ethereum coin held by South Korean citizens. According to some cryptocurrency news outlets, nearly 20% of the total stock of ETH is owned by individuals residing in South Korea.
This news, however, is not all sunshine and rainbows for the crypto community in and outside of Korea. Aside from the juxtaposition of a government regulator overseeing the operation of blockchain systems that are designed with the intent of being free from the control of a single authority, this proposed bill would also make the development of ICO’s a possibility only for entities such as public organizations and research centres. Hopefully, there will eventually be some middle ground between blockchain technology and the need for governments to protect their citizens, but as things stand right now, we appear to be witnessing the slow and steady centralization of a product designed to be decentralized.
South Korean ICO’s Made Illegal in 2017
While the majority of the digital currency projects and initial coin offerings that have launched in the last two years have been legitimate financial projects, a few have, most certainly, been nothing short of scams. As you have probably already guessed, those ICO’s that were scams spooked more than a few governments into instituting all-out bans of initial coin offerings. China developed a ban, the United States did to some extent as well, and South Korea legislated their own prohibition back in September 2017.
The ban in Korea was specific, outlawing only those ICO’s originating within the confines of Korean borders, but, as you may have guessed from the sheer volume of Ethereum that Koreans apparently own, the use and investment of established coins was not specifically prohibited. There is a lack of clarity about what the law actually says about this, but enforcement is certainly on the side of the allowance of established coin use.