South Korea has been on the frontline of ICO regulation in recent months, following the decision of lawmakers there to outlaw initial coin offerings, as part of a wider crackdown on activities within the cryptocurrency space.
Now, a group of lawmakers is reported to be working on a bill that would seek to overturn the ban, and reintroduce ICOs on a legal footing.
According to local media reports, lawmakers are drawing up proposals which could be presented later this year, of early 2019 at the latest. The proposals are being led by Rep. Hong Eui-rak, who told the National Assembly this week of his plans to challenge the 2017 ban.
“The bill is aimed at legalizing ICOs under the government’s supervision…The primary goal (of the legislation is helping remove uncertainties facing blockchain-related businesses,” Hong said, according to Korea Times.
However, far from a return to the free-for-all conditions of the unregulated market, the proposals would allow only “research centers” and public organisations from deploying the funding model, which most market analysts would consider a step in the right direction for legitimising token issues. Nevertheless, the proposals will come as a surprise to some, following the decision in South Korea to ban initial coin offerings in the first place.
The 2017 decision seems to have had little impact on trading volumes or interest in the wider cryptocurrency space in South Korea, save for a reduction in the number of dubious ICOs being launched each month.
It follows similar moves by regulators elsewhere to bring ICOs in line with existing securities laws. In the U.S., for example, the Securities and Exchange Commission declared some ICOs to be de facto securities, accompanied by several other motions towards a formal, regulated environment for the ICO model.
Authorities in China have come down hard on the other extreme, effectively banning the model outright—a policy approach that has apparently gained some traction across other Asian countries.
This makes a new structure in South Korea potentially even more significant, and the chance to set a new precedent for regulating ICOs in the region.
With the implications of the 2017 ban still becoming apparent, it remains to be seen whether the more moderate approach proposed in the bill will gain the necessary support to become law, and to soften the regulatory approach to ICOs in South Korea.