South Korea will maintain its ban on initial coin offerings (ICOs), following analysis of a survey conducted by the country’s Financial Supervisory Service (FSS), on behalf of Korea’s chief financial regulator.
The survey was conducted on behalf of the Financial Services Commission, and was commissioned to influence future government policy around the ban.
The ban on ICOs was introduced in September 2017, over fears around stability, risk and the real potential for abuse and market manipulation.
At the time, officials were quoted as saying intervention was necessary to prevent “unlawful acts.” The said, “If there is an unlawful act, a third party has to intervene, but it is difficult to intervene until the transaction volume or price soars.”
Following the survey, which revealed ICOs were continuing to flout the law by setting up in foreign jurisdictions to raise funds from Korean citizens, the Financial Services Commission said the ban would remain in force to protect investors.
There had been some suggestion that the ban was up for consideration, with lawmakers debating the merits of the ban in the country’s parliament. However, following the findings, and ongoing reports of failed or fraudulent ICOs, the commission said it was sticking with its previous stance.
“The government has taken a cautious stance on the institutionalization of ICOs. We will stick to it,” the commission stated.
ICOs across the board plummeted in value over 2018, with the bear market pushing many into the position where tokens are trading at below the ICO sale price.
The survey highlighted key destinations for ICOs as Switzerland and Singapore, suggesting that while ICOs were no longer listing in Korea, they were still raising funds from Korean citizens, in contravention of the ban.
In particular, the FSS noted marketing materials in Korean being offered by companies with a paper registration in Singapore, in what appears to be the direct promotion of ICOs to Korean investors.
Other projects were found to fall short on detail, including the use of false and misleading statements. The survey was conducted over a sample of 22 companies, with 13 responses factoring into the data, with the companies involved having all staged ICOs since 2017.
The projects raised a combined total of over $500 million from investors.
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