South Korean Regulator Refuses to Lift ICO Ban
South Korea will not lift the ban on token sales it imposed in September 2017 despite numerous efforts to build legislation allowing domestic ICOs.
The latest verdict of South Korean regulators has arrived, and the initial coin offering (ICO) ban introduced in the fall of 2017 will stay in place. The authorities pointed out that ICO investments were speculative and risky for personal finance, so companies should not be allowed to conduct this type of fundraising.
The ICO model has all but disappeared in recent months as retail buyers abandoned hope that an investment would guarantee high returns. Most ICO tokens were underwater in 2018, and projects lost almost all of their potential funding due to low Ethereum (ETH) prices. However, Korea remains one of the most active regions for digital asset adoption, and trading is as buoyant as ever. Non-domestic ICO projects quite often find liquidity on Korean exchanges.
Despite the ban, ICOs continued to be registered in neighboring countries and marketed to Korean buyers, as discovered by the local Financial Services Commission. Despite the market slowdown, such projects raised the equivalent of $7.8 billion in 2018, up from $6.7 billion in 2017, according to research from ICOData.
Singapore was the second most preferred jurisdiction for ICOs, making it easier for Korean buyers to access new project offerings. The city-state has hosted 529 ICOs until now, second only to the USA with 732 ICOs. But the prevalence of projects with questionable success added to the skepticism, and ICO-positive legislation remains highly unlikely in South Korea.
Analysts see the future in security token offerings (STOs) - legalized and transparent tokens where claims of intrinsic value can be verified. Korean blockchain analytics company Chain Partners Research believes the STO market in the country will pick up in 2019, but the inflow of institutional investors will be the key, as reported Business Korea. CP Research sees the STO market growing to $2 trillion by 2030.
However, Coinone Research is more skeptical, expecting STOs to also face hurdles in South Korea. These researchers view STOs as an attempt to sell off low-quality assets by relying on the novelty of tokenization.