The KBIZ, Korea Federation of SMEs, Friday proposed that small-and medium-sized companies be permitted to raise fund through initial coin offering (ICO).

In a seminar at the KBIZ conference hall in Seoul, the federation said legalizing ICO will help SMEs diversify funding sources and thereby spur innovation,

The federation suggests that the government introduce a standard ICO rule Issuers must introduce a self-regulatory guideline. Through transparent rules and regulations, can the ICO become a useful tool for innovative startups and small companies, it added.

Korea’s small companies have relied heavily on bank loans and state-subsidized funds so far. The blockchain and cryptocurrency will open new possibilities for small companies to diversify funding sources and receive payments on their supplies on a stable basis, it added.

The government can also use blockchain in initiating public works and monitoring small-and medium-sized companies, the federation said,

It said blockchain could be used in public administration, e-voting, e-residence card, registration of property, bill settlement, remittance and insurance contracts, electricity exchange, Internet of Things (IoT) and clouding services.