South Korea’s central bank has indicated that initial coin offerings (ICOs) will be allowed under the Digital Assets Framework Law, according to a local news report. This extensive legislation is expected to be introduced in 2023 and apply the following year.
The Bank of Korea (BOK) referred to ICOs in his comments to a Korean translation published on Monday of the European Union’s legislation on markets in crypto assets (MiCA). The BOK stated that the MiCA regulatory package protected users and investors without hampering innovation.
“A balanced approach is needed to foster a robust market through the introduction of a crypto asset regulation system to promote blockchain and crypto asset innovation, while not hindering the development of related industries due to excessive regulation,” the Korean central bank wrote, continuing:
“When the Digital Assets Framework Law is enacted in the future, it is necessary to institutionally allow ICOs of national crypto assets.”
South Korea banned domestic ICOs in 2017, at the height of the ICO “mania” that led to restrictions around the world. That decision was controversial from the start. Since the imposition of the ban, South Korean crypto firms have issued new crypto assets abroad and sold them in South Korea through domestic exchanges.
The BOK also commented on MiCA’s approach to stablecoin regulation.; “Considering that users suffered a lot from the Luna-Terra incident, it is necessary to adopt MiCA-level regulations for stablecoins,” he added:
“When enacting the Framework Law on Digital Assets, it is necessary to ensure that the role and responsibilities of the Bank of Korea, the monetary authority, for stablecoins, etc., are specified.”
Stablecoins have been in the crosshairs of the South Korean government in recent months, after members of parliament to launch an investigation into the collapse of Terra (LUNA). South Korean President Yoon Suk-yeol, a member of the conservative People’s Power Party, made the lack of regulation of the cryptocurrency industry an issue in the election campaign that led to victory in March.
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