Following the example of China, now South Korea has banned all "initial coin offerings" (ICOs) in the country.
South Korea's financial regulator on Friday banned all "initial coin offerings" (ICOs) in the country.
Following the example of China, now South Korea has banned all "initial coin offerings" (ICOs) in the country. Similar to the restrictions in China on initial coin offerings, South Korea’s financial regulator on Friday said it will ban raising money through all forms of virtual currencies.
The country’s Financial Services Commission (FSC) said, “All kinds of initial coin offerings (ICO) will be banned as trading of virtual currencies needs to be tightly controlled and monitored”, reported Reuters. “Stern penalties” will be issued on financial institutions and any parties involved in issuing of ICOs, the statement added, without elaborating further on the details of those penalties.
The decision to ban ICOs as a fundraising tool was made as the government is of the view that such issues are increasing the risk of financial scams. Earlier on September 4, China first banned ICOs and then ordered to shut down bitcoin exchanges in the country. South Korea’s move is similar but the order is not extended to ban the cryptocurrency exchanges. According to the announcement, the Korean government will continue to monitor cryptocurrency markets to see if additional regulations are needed.
Notably, in order to regulate digital currencies in South Korea, a task force was set up in July to evaluate the need for cryptocurrency regulations. Moreover, there was also a proposed amendment to the Electronic Financial Transactions Act to provide a regulatory framework for digital currencies.
Earlier this week, it was also reported that South Korea’s Ministry of Science and ICT and Korea Communications Commission are deciding to conduct on-site inspections of bitcoin exchanges. The purpose is to look at the cyber security of cryptocurrency exchanges as well as to ensure that they are in accordance with country’s privacy laws.
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