Instead of IPO: Local Companies Turning to Overseas ICOs to Raise Funds | BusinessKorea

Wednesday, March 21, 2018

Some of major Korean companies are actively going ahead with overseas initial coin offerings (ICO).
Some of major Korean companies are actively going ahead with overseas initial coin offerings (ICO).
Seoul, Korea
12 March 2018 - 10:30am
Michael Herh

The overseas initial coin offering (ICO) market is attracting much attention. The overseas ICO market shows the development of new virtual currencies and related projects and raises funds online. Concern is growing that the IPO market, a major financing channel for corporations, is likely to shrink due to the expansion of overseas ICOs, especially those by major Korean information technology (IT) companies.

According to the financial investment industry on March 11, as ICOs raising investment money through the issuance of virtual currencies are getting more attention, some major Korean companies are actively going ahead with overseas ICOs.

An ICO aims to raise funds online by providing a newly developed virtual currency or by issuing a token that bundles rights to relevant virtual currencies and related projects. Like an IPO, an ICO raises funds from the general public, but differs in that an ICO offers virtual money or tokens instead of issuing securities to investors in exchange for funds. Companies prefer ICOs since they can raise funds while avoiding demanding listing conditions such as those for IPOs.

In fact, on a gradual increase are ICO-based financing by domestic and foreign companies, including domestic IT companies. In Korea, an ICO is not illegal because there are no laws against them. However, since financial authorities are regulating ICOs, Korean companies are moving ahead with ICOs abroad mainly in Switzerland, Gibraltar and Singapore.

Telegram, a global mobile messenger company, developed new virtual currency 'Gram' through the blockchain platform 'TON.' It was reported that Telegram raised 900 billion won in pre-sales to venture investors via an ICO.

Recently, Hyundai BS&C, an affiliate of the Hyundai Group, established a blockchain-related corporation in Switzerland and issued 300 billion won in their virtual currency called 'Hdak'. Theloop, a subsidiary of Daily Intelligence, raised about 100 billion won in the virtual currency 'icon,' and blockchain company 'Govern-Tech' also raised 17 billion won through the development of virtual currency 'Boscoin.'  Glosper, which specializes in blockchain technology, collected 15 billion won through a Hycon ICO, and Medi Block, a medical information management platform, about 7 billion won by issuing Medi Token.

In addition, healthCare startup Zikto will establish a corporation in Singapore and collect about 20 billion won through an Insureum ICO through a blockchain-based insurance platform. My 23 Healthcare will also build a healthcare data-sharing platform and will have an 'Alphacon' ICO in May through a Singapore subsidiary. Hanbit Soft, a game maker, plans to have an ICO through its Hong Kong subsidiary, 'Bryllite Coin,' a virtual currency, and Zper, a blockchain-based P2P financial platform, is planning to have an ICO with cryptocurrency Zper.

Naver, a leading IT company in Korea, is preparing a virtual currency service after establishing 'Line Financial' through its subsidiary Line in Japan. Although the company did not disclose a specific business plan, it is becoming more likely that it will issue 'Line Coin' as the company is expected to have an ICO.

"There has been a lot of talk that the advent of virtual money will be a threat to the basic functions of the Korea Exchange," said an official of the Korea Exchange. "It is necessary to seriously consider measures to strengthen competitiveness in response to ICOs.”


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