There have been many discussions expressing fear or concern regarding South Korea maintaining its stance on ICO bans due to results found in a survey conducted by South Korea’s Financial Supervisory Service, and what it exactly it means for ICON.
Why is South Korea Maintaining its ICO Ban Policy?
In light of recent news of the South Korea government maintaining its current ban on all Initial Coin Offerings (ICOs) from domestic companies, many will argue that this is not an ideal situation for the blockchain industry.
So, why were ICOs banned in the first place in Korea? In short, ICO bans are a way for the government to protect investors from potential scams until a better framework for ICO regulations and policies are set in place.
The reason why Korea is maintaining its ban on ICOs is due to the results of a survey conducted by South Korea’s Financial Supervisory Service (FSS) of 22 local companies holding ICOs abroad. Majority of the companies surveyed failed to provide adequate transparency and would not disclose essential or accurate information for investors (company profile, business contents, financial statements, etc). Additionally, marketing materials and whitepaper in the Korean language were discovered indicating that companies were soliciting funds from Korean investors.
South Korean Government Continued Support for Blockchain
Two important things to note that many people tend to forget:
- Not all companies, projects, and startups require ICOs to raise funds.
- Despite many people interpreting the ban on ICOs in Korea as the government being against the development of blockchain projects, an ICO ban is not a statement by the government on its stance on blockchain.
From the same press release of the survey conducted by the FSS, the South Korean Government have multiple initiatives to expand its support for blockchain technology and startups:
- Expand the public pilot project from 6 in 2018 to 12 in 2019.
- Double the investment in blockchain research and developments.
- Provide tax benefits for blockchain research and developments.
- Vitalization of the blockchain industry by training 10,000 blockchain professionals by 2022.
How Does Maintaining the ICO Ban in Korea Affect ICON x Deblock?
Deblock, a VC firm and accelerator founded by ICON Foundation, mainly focuses on projects and teams based in Korea. With the results of the survey conducted by the FSS, one concern many people had was whether or not ICON or Deblock had any affiliations or involvement with any of the teams or projects that violated the prohibition of ICOs in Korea. Managing Partner of Deblock, 오현석 (Hyun Oh), was able to address this concern:
“No, we have not involved ourselves with any teams that engaged in these types of practices.”
While many see the ban on ICOs in Korea as something detrimental to the partnerships and relationships with ICON and the Korean government, Oh is more optimistic regarding the situation, and provides insight on Deblock’s future plans on working with the Korean government regarding blockchain startups in Korea.
“Deblock is going to invest in blockchain startups, not just ICOs, and we are in the planning phase to set up an acceleration program in collaboration with a government acceleration entity to invest and accelerate early stage blockchain startups.”
Although ICOs are still banned in Korea, DApps and other projects in Korea can still be built on the ICON platform without violating any laws. Security Token Offering (STO) also provides a possible legal alternative for blockchain companies to raise funds that is becoming evermore prevalent in not just Korea, but worldwide.
It’s also reassuring that the ICON team seems to be well-aware of this shift in token offerings by providing support for STO as seen below in their roadmap:
With STOs potentially becoming the new standard for fundraising, accelerator programs and partnerships spanning across the globe, Seoul Metropolitan Government and other government entities already applying loopchain, and general support for blockchain from the Korean government, ICON shows no signs of slowing down its growth of its ecosystem.