South Korea Set to Lift ICO Ban, Restricting Issuance to Registered Corporates

• Regulators plan to reverse the 2017 prohibition on domestic coin issuance.

• Issuance will be limited to corporate entities to ensure legal accountability.

• Move expected to trigger "reshoring" of crypto projects from Singapore and Hong Kong.

South Korean financial authorities are moving to lift a total ban on Initial Coin Offerings (ICOs), pivoting toward a regulated framework that restricts digital asset issuance to corporate entities and mandates strict disclosure requirements.

According to a report by Newsis on Monday, regulators have reached a preliminary consensus to allow domestic ICOs, provided the issuer is a corporation meeting specific eligibility criteria. The policy shift aims to bring the crypto market within the institutional fold while ensuring clear liability in the event of financial malpractice.

Regulatory Pivot

The proposed framework requires companies seeking to issue coins to submit a comprehensive "report"—similar to a securities registration statement—to the Financial Services Commission (FSC). While the Financial Supervisory Service (FSS) will review these filings, authorities have clarified that acceptance of the report constitutes a disclosure of information rather than a government endorsement or guarantee of the project's value.

This marks a significant departure from the hardline stance taken in 2017, when South Korea prohibited all forms of ICOs citing concerns over speculative overheating and fraud.

Under the new guidelines:

• Corporate Restriction: Only legal entities will be permitted to issue tokens, a measure designed to prevent "rug pulls" by anonymous teams and ensure accountability.

• Mandatory Disclosure: Issuers must publicly disclose white papers, business structures, and risk factors prior to issuance.

• Liability: Issuing corporations will bear full legal responsibility for damages resulting from misleading information or project failures.

Reshoring Digital Assets

The policy reversal is expected to encourage the "reshoring" of domestic crypto projects. For years, South Korean blockchain ventures—and potentially major conglomerates like Samsung—have been forced to establish subsidiaries in crypto-friendly jurisdictions such as Singapore or Hong Kong to issue tokens.

By opening a pathway for domestic issuance, regulators aim to repatriate these projects, allowing them to raise capital within South Korea transparently.

Path to Legislation

The provisions are slated for inclusion in the upcoming Digital Asset Basic Act (the second phase of virtual asset legislation). Specific requirements, including capital thresholds for issuers, are expected to be codified in enforcement decrees following the bill's passage.

While the new rules may present high barriers to entry for smaller startups, market observers view the move as a step toward institutionalizing the sector. The framework mirrors the Initial Public Offering (IPO) process, offering a legitimate capital-raising channel for verified enterprises while filtering out the high-risk, opaque projects that originally prompted the 2017 ban.