Blockchain developers say Finance Minister-designate Hong Nam-ki is out of touch with the global market trend.

They reacted cynically to Hong’s remark Tuesday at the National Assembly hearing on his appointment. He said the government has strongly encouraged companies to develop blockchain technologies for upgrading such industries as medical and logistics services.

Hong said the government had not discouraged companies from developing blockchain technologies.

However, he had not mentioned that money or investment is necessary to develop technologies. He failed to mention that Korea and China are the two countries that ban companies from raising capital through initial coin offering (ICO). ICO is a bread and butter for blockchain startups.

China provides strong financial support to blockchain developers although the country bans ICO. In South Korea, little government funding is possible for blockchain developers.

Without ICO, companies have few outlets for mobilizing capital. Korean startups have difficulty borrowing money from banks or drawing capital from venture capital companies.

Many local blockchain startups have moved to foreign countries where they can raise capital for financing their development.

From the government’s perspective, it may be tempting to ban ICOs as many fraudsters defraud investors of money. Many Seoul economists recalled the Kim Dae-jung (1998-2002)’s active policy initiative to support Internet companies. The initiative created more jobs and has made Korea one of the world’s strong Internet powerhouses. Although the drive had emboldened many fraudsters to abuse state support, but overall, contributed to the development of the Internet industry, they said.

They noted that the government should establish ways of financing blockchain startups.

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Many blockchain startups are also under fire because they are too much engrossed in raising money without proving concrete technological prowess.

South Korea is well behind the United States, China and other countries in the number of blockchain technology patents. The U.S. led the world with 497 patents, followed by China’s 472.

Korea’s CoinPlug has 41 patents, becoming the world’s seventh largest holder of blockchain patents, way below Alibaba’s 90 and IBM’s 89.