The government of South Korea, this week, officially decided to keep up its present blanket ban on domestic initial coin offerings in a move that possibly will do good to other major cryptocurrency markets across Asia.
The digital currency task force of the Office for Government Policy Coordination released a wide-ranging report on the Initial Coin Offering industry, on Friday last week.
Moreover, local financial authorities acknowledged that the government considers the Initial Coin Offering model to be a high-risk investment vehicle in countless areas. As such, the government will keep on reinforcing a ban on domestic cryptocurrency token sales.
It is to be noted that it’s not only the domestic ICOs. In fact, foreign cryptocurrency firms could also be in trouble. Presently, local investors are permitted to participate in token sales conducted exterior of the country, based on obtainable policies in South Korea.
Throughout the past 12 months, the government said that firms abused the regulatory loophole by establishing paper companies in overseas markets.
To circumvent the strict ban on local ICOs, firms based in South Korea have created entities in regions like Japan and Switzerland to conduct token sales.
The financial authorities emphasized that local companies which initiated token sales in overseas markets could still face regulatory issues in South Korea if the companies targeted local investors.
It is to be noted that South Korea could miss out on multi-billion dollar opportunities with its current ban on Initial Coin Offerings. Interestingly, a number of the country’s biggest companies including Kakao premeditated to conduct cryptocurrency token sales in the past.
Kakao allegedly is in the process of starting a private token sale in Japan worth hundreds of millions of dollars.