Bank Of Korea Allows Cryptocurrency ICOs To Be Traded In The Country

After years of prohibiting the domestic issue of new cryptocurrencies via initial coin offerings (ICO), the Bank of Korea (BOK) has signaled a shift in its position.

In this vein, the proposed Digital Asset Framework Act highlights that there is a need to institutionally authorize local cryptocurrency ICO for traded digital assets such as Bitcoin (BTC), according to South Korean news site Infomax on August 29.

It is worth noting that the proposed rule will bring transparency to the industry, as most domestic entities previously created companies abroad to issue new crypto assets and then list them on domestic trading exchanges.

“In the future, when the Framework Act on Digital Assets is enacted, it is necessary to institutionally allow domestic cryptographic asset ICOs. The effect of making it possible to prepare a protective device is also expected,” the bank said. 

The regulator stressed that the regulation’s goal is to protect consumers and improve the transparency of cryptocurrency-related transactions. BOK, on the other hand, stated that the restrictions should not inhibit innovation in the blockchain sector.

“A balanced approach is needed to foster a healthy market through the introduction of a crypto asset regulatory system to promote blockchain and crypto asset innovation while not hindering the development of related industries due to excessive regulation,” BOK added. 

The regulation suggestions came months after the contentious Terra (LUNA) ecosystem disaster, which is still being investigated by the country’s authorities. Notably, BOK emphasized that stablecoin laws should be more advanced than the recommendations given under the European Union Crypto Asset Market Act (MiCA).

“In Korea, recently, considering that users suffered a lot from the Luna-Terra incident, it is necessary to adopt MiCA-level regulations for stablecoins,” the bank said. 

South Korea established a Digital Assets Committee to develop rules and monitor the crypto sector until the relevant government body is constituted under the Digital Asset Framework Act.

However, the function of crypto rules and oversight, according to BOK, should be handled by the central bank and monetary authorities.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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