South Korea prepares plans to legalize ICO

The Korea Times with reference to the source informs that the financial authorities are preparing a plan to allow initial coin offerings (ICOs). It's required by the necessity to promote blockchain based technologies, the source familiar with the issue explained. 

"The financial authorities have been talking to the country's tax agency, justice ministry and other relevant government offices about a plan to allow ICOs in Korea when certain conditions are met," said a source to the media. 

The plan, if implemented, will be a major reversal as last September the government banned ICOs, claiming cryptocurrencies were neither money, nor currency or financial products.

Currently, local investors are allowed to put money into foreign ICOs and digital currency exchanges operating within the country. Kang Young-soo, who oversees cryptocurrency trading policies at the Financial Service Commission (FSC), said the country's top financial policy regulator has yet to decide whether to allow ICOs in Korea for domestic investors and companies. 

"There are many speculating about the possibility of allowing ICOs. The FSC has acknowledged a third-party view regarding the issue, but there's nothing that we can say officially at the moment," Kang said. Another source thinks the order banning ICOs would only be reversed after the country develops the respective legal framework for crypto-trading.   

"Various scenarios such as the imposition of value-added tax, a capital gains tax, or both on trade; and the collection of corporate tax from local cryptocurrency exchanges, as well as the initiation of authorized exchanges with licenses are being discussed," said the source. He added that allowing ICOs should involve local banks, the justice and finance ministries, and the tax agency to create transparency. This will allow the government to track the history of capital inflow into ICOs.