Bank of Korea requires institutional issuance of cryptocurrency digital currencies, indicating the end of the ban

The Bank of Korea (BOK) has signaled a change in its stance on the local issuance of new cryptocurrencies through initial coin offerings (ICOs) after years of banning the initiative.

In this line, the institution notes that, through the proposed Digital Asset Framework Act, there is a need to institutionally allow local cryptocurrency ICOs for digital assets in circulation such as Bitcoin (BTC), South Korean News Agency Infomax reported on August 29.

Notably, the proposed regulation will lead to clarity in this sector, given that most of the previously established local entities are offshore companies to issue new crypto assets and then list them on local exchanges.

“In the future, when the Digital Asset Framework Act is adopted, it will be necessary to institutionally allow ICOs for local crypto assets. The impact of enabling the setting up of a protective device is also expected,” the bank says.

The regulator emphasized that the purpose of the regulation is to protect consumers and increase the transparency of crypto-related transactions. However, the Bank of Khartoum indicated that the rules should not stifle innovation in the blockchain sector.

“There is a need for a balanced approach to promote a healthy market by introducing a regulatory regime for crypto-assets to promote blockchain and crypto-asset innovation while not hampering the development of related industries due to excessive regulation,” the Bank of Korea added.

Sophisticated stablecoin rules

The proposed rules come months after the controversial Terra (LUNA) ecosystem collapsed, an issue the country’s authorities are still investigating. In particular, the Bank of Korea stated that the rules for stablecoins should be complicated compared to the recommendations made under the European Union’s Crypto Asset Market Act (MiCA).

“In Korea recently, since users have experienced a lot of the Luna-Terra incident, it is necessary to adopt MiCA-level regulations for stablecoins,” the bank said.

As Coinphony reported, after the collapse of Terraform Labs, South Korea created the Digital Asset Commission tasked with setting regulations and oversight of the crypto sector until the appropriate government authority is formed under the Digital Asset Framework Act.

But according to the Bank of Korea, the central bank and monetary authority should take over the role of regulating and monitoring cryptocurrencies.

Post-Bank of Korea has called for the institutional issuance of digital currencies for cryptocurrency, signaling the end of the ban that first appeared on Coinphony.

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