The State of ICOs
While many companies are crazy about ICOs there is something that that many should realize. ICOs as of now is not healthy. The tool itself is very innovative and it also can address a lot of access to finance challenge which exists globally. Therefore it has a lot of positives sides. Startups and companies are raising money quicker than ever while at the same time allowing investors to be more involved with the project.
High Risk for Investors
However, it also creates a lot of risks. Especially for the small investors who don’t have the sophisticated system for due diligence. Suddenly they get offered this opportunity to this very early startup which might not even have a proper product even. The chance that the startup will go bankrupt is very high. So if a lot of investors who are not experienced and professional enter into this space and invest in ICO that fail, it can not only create a lot of economic problems but can also cause social policial problems. Therefore because it is not healthy now the Korean government is looking to pause it.
What the Korean government is trying to tell us is that the ICO market to them has to first be healthy. Until it gets healthy they do not want their citizens being involved in ICOs. However, we all know that no policy lasts forever. Every government will do their best for the country.
ICO, Blockchain, digital currency, crypto exchange, all those are very new phenomena that the Korean government need to gain experience in this field so they can learn how to regulate it. Pausing ICO in Korea is a healthy way for them to gain the experience they need to set up regulations. The biggest challenge for the Korean government right now is doing the research. Doing research takes time and money, however to for the successful future of ICOs in Korea, this is a must.
When will ICO be allowed in Korea?
That depends on the market. If Korea sees other countries finding success with ICOs then Korea might feel the need to allow it. Or they can start off slow with pilot programs to only let the best ICO startups do the ICO so they can learn from it. If it is a success then they have the data to make the right regulations. If it is a failure than it really didn’t hurt Korea’s economy because of this pilot test under a controlled environment. In the future investors in ICO will want to see more than just a white paper. You will have to have a product, customers, and the right team. So, in the end, it could look very similar to a traditional VC round.
