A Major Korean company “Kakao” Deploys Kakao Talk and Carries Out an ICO! What is its Actual Condition?

I think you all know about the message application “Kakao Talk,” but did you know that the major Korean company “Kakao” that develops the Kakao Talk is implementing an ICO? In this article, I will explain the actual situation of the Kakao ICO.

About Kakao

Kakao boasts a market share of nearly 90% in the Korean messaging application market and is a leading company in Internet services. In Japan, LINE is used as a major messaging application, but in Korea Kakao Talk was born a year earlier and is still gaining more users. KaKao Co., Ltd. established a blockchain affiliate in Switzerland in March 2018, expressing intentions to implement an ICO, but abandoned it temporarily due to a warning from the Korean regulatory authority, the Financial Committee (FSC).

Kakao’s ICO

Kakao is said to have raised about $300 million or about 34 billion Yen in funding this ICO. However, Korea as a country is very strict with their many restrictions on ICOs, and have in the past received warnings from regulatory authorities as mentioned above. How can they implement ICOs in the world where regulations on ICOs are being strengthened?

Legality of ICOs

The Kakao ICO was carried out by Clay, which has its own token, for their overseas investors but it was implemented as a private sale rather than being released to general individual investors. Investors at that private sale are also considered to have participated by partner organizations and companies that are considered “strategic partners to improve and grow the blockchain system.” Depending on the method of financing, Korean regulators may regard the funding method as fraudulent or multilateral, and because the risk is high from the viewpoint of investor protection, they are in a negative position with this ICO. Also, as a viewed from the SEC in the US, registration is not necessary with the SEC if it is private financing, so it can be said that registration of this Kakao ICO is unnecessary.
In addition, in Japan on November 27th, the FSA reported their policy to obligate business operators that sell their own currency to register with the FSA in order to protect individual investors. Investors approved by doing this registration have the possibility of being allowed to participate in ICOs. In consideration of ICO regulations, a company named Block X raised funds in this manner, so the word is there is a possibility that they fall within the regulatory framework.

In this way, with the strengthening of ICO regulations and the difficulty of conducting ICOs by companies themselves, the large amount of funds raised that may be considered satisfactory by regulations of each country appear to be properly carried out. Although ICO regulations in the future are uncertain, this whole movement for demanding more clarity by regulators is progress towards the future no matter how you look at it.