This week, Hong Ki-hoon, a respected economics professor at the prestigious Hongik University, heavily criticized the decision of the government to place a blanket ban on domestic initial coin offering (ICO) projects.

In Sept 2017, the government of South Korea and local financial authorities officially banned domestic ICOs, disallowing both individual and institutional investors from investing in token sales conducted by local companies.

Three months subsequent to the imposition of the initial ban, several government officials hinted the consideration of legalizing ICOs for institutional and accredited investors.

As mainstream media outlet Chosun reported in December of last year, an official in the crypto task force formed by the government disclosed that institutional investors could be allowed to fund token sales.

However, fast forward eleven months, domestic ICOs remain banned for all types of investors in the country including institutional, individual, retail, and accredited investors.

Not Realistic, Delusional Decision

At a seminar hosted by the Korea Institute of Finance and Korean Securities Association, Hongik University professor Hong Ki-hoon firmly stated that the controversial decision of the government to prematurely ban domestic ICOs is essentially shifting away from reality and dismissing the fact that ICO has become an established method of raising money for blockchain projects.

Citing the report of the government entitled “Cryptocurrency Market’s Regulation and Policy,” professor Hong said:

“The finance sector tends to view ICOs with a lack of seriousness, but the dismissal of ICOs is essentially dismissing reality. Given the nature of cryptocurrencies and their potential, a blanket ban on ICOs is not ideal and appropriate.”

The call for the legalization of ICOs by professor Hong comes less than a month after Min Byung-doo, the chairman of Korea’s National Policy Committee, encouraged the government to implement better policies surrounding the cryptocurrency market including ICOs.

On October 4, 8BTC reported that chairman Min requested the government to legalize ICOs and solidify the cryptocurrency market as a legitimate industry.

At the time, chairman Min emphasized that the government cannot dismiss ICO projects because it has become a new trend in the global crypto and finance market. Companies have started to raise billions of dollars in token sales and preventing local companies from conducting ICOs is detrimental to the economy of South Korea, he argued.

“The government cannot dismiss ICO. It needs to allow companies to conduct ICO. ICO has become a new trend in the global market and it is the responsibility and ability of the government to embrace new technologies. We can see that the flow of investment is clearly changing compared to ICO and angel fundraising. The ICO has raised $1.7 billion for Telegram and $4 billion for Block.One, It is getting bigger and bigger.”

An overall increase in the intensity of voice supporting the legalization of ICOs is expected to encourage the government to decide whether to enable restrictive access to ICOs or completely open the ICO market to the public by the end of November.

Throughout the past two months, local publications reported that the government of South Korea is preparing to release an announcement in November to first allow a small portion of investors in the public market to invest in ICOs, and gradually open the market to the public.

Positive Sentiment

This month, the Financial Services Commission (FSC) of South Korea formally stated that banks are permitted to work with crypto exchanges and provide virtual bank accounts to digital asset trading platforms.

The recognition of cryptocurrency-related businesses as regulated and legitimate financial companies led investors in the local market to develop positive sentiment.

An optimistic development in the local ICO market will allow the cryptocurrency market to end 2018 on a positive note, despite the 70 percent drop in the valuation of the digital asset market.

Photo by Jongsun Lee on Unsplash