South Korea has maintained a reasonably negative stance on cryptocurrencies and initial coin offerings (ICOs) since their blanket ban in September 2017. According to Business Korea’s article released on October 4, 2018, however, the National Assembly is looking to convince the government to remove the ICO ban as it may undermine South Korea’s future competitiveness.
Ban Forces Startups to Move Abroad
South Korean Lawmakers Min Byung-doo, from the ruling Democratic Party (DP), chair of the National Policy Committee from the National Assembly, and Roh Woong-rae, a member from the DP Party who leads the Science, ICT, Broadcasting and Communications Committee, are pushing the South Korean government to legalize ICOs.
On October 2, 2018, Min and Roh hosted a forum on blockchain technology at the National Assembly Library. The forum gained support from organizations such as the private think tank Yeosijae (Future Consensus Institute), the Korea Blockchain Industry Association, the Open Blockchain Industry Association, and the Korea Blockchain Industry Promotion Association.
The blockchain forum raised a lot of issues concerning South Korea’s cryptocurrency and ICO laws. While the South Korean Ministry of Science and Information Communication Technology (ICT) vowed to increase government funding and support for domestic blockchain projects in September 2018, Min noted that the government had neglected the sector overall. He admitted concerned regarding a recent report which indicated that South Korea’s progress with blockchain technology has fallen to 75 percent of the U.S.
Many blockchain-related startups also left South Korea after the ICO ban to set up in more cryptocurrency-friendly countries like Malta or Switzerland. “After the government has banned ICOs, blockchain startups have been going abroad,” said Roh.
“There are growing concerns that the government’s regulations are nipping the bud of the blockchain industry, a key sector of the Fourth Industrial Revolution.”
The South Korean Government, however, appears keen to push the innovation forward. ZDNet recently announced on October 4, 2018, that Seoul, South Korea’s capital is looking to create a blockchain center that will house approximately 200 companies. They also plan to launch a 100 billion won ($88 million) fund. With the Government’s existing ban on ICOs, and the influx of talent moving abroad, it may still be hard for the government to implement their blockchain center and attract the right talent successfully.
Lawmakers Set on Finding a Solution
In the past, the South Korean Government has attempted to reverse the ban on ICOs. Although they have been discussing this issue in March 2018, there seems to be very little progress on the matter.
Business Korea reported that the National Policy Committee is confident that they will come to a solution on this matter. The Committee will draft a bill for ICOs and blockchain technology and hold a public hearing in November 2018. The goal is to bring in the relevant associations and organizations such as the National Policy Committee, the Science, ICT Broadcasting and Communications Committee, to come up with a means to counteract any adverse side effects from the industry.
Roh hopes that the public hearing will ensure that the South Korean blockchain industry can flourish to create new jobs for the country.