The central Bank of Korea (BOK) is changing its stance on the blanket ban of domestic initial coin offerings (ICO) after having instituted it in 2017.
The BOK has called for the issuance of ICOs, signalling an end to the ban. Through the proposed Digital Assets Framework Act, the Bank has said there is a need to institutionally allow local crypto ICOs for traded digital assets such as Bitcoin, the South Koreas news agency Infomax reported. The proposed regulations are to provide more clarity regarding the virtual asset sector. The report stated:
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 BOK said that the purpose of the regulation is there to protect consumers and enhance the transparency of crypto transactions. It noted however that regulations should not hamper innovation in the blockchain sector. It added:
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.
Following the collapse of Terraform Labs, the BOK has said that there is a need to adopt regulations in line with Markets in Cryptoassets (MiCA), adding:
In Korea, recently, considering that users suffered a lot from the Luna-Terra incident, it is necessary to adopt MiCA-level regulations for stablecoins.
After the collapse of Terraform Labs, South Korea established a Digital Assets Committee tasked with creating regulations and overseeing the digital asset sector, until an appropriate government agency is established under the Digital Asset Framework Act.
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