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article imageSouth Korea follows China in banning cryptocurrency ICOs

By Ken Hanly     Sep 29, 2017 in Technology
Seoul - The South Korean Financial Services Commission announced it will ban raising money for all forms of cryptocurrencies through initial coin offerings (ICOs). The Commission said that trading in the currencies needs to be tightly controlled and monitored.
China banned ICO's some time ago but also has closed down crtypocurrency exchanges in the country although it still allows over the counter trades between individuals. It remains to be seen whether South Korea will follow China further and also close down cryptocurrency exchanges at least temporarily. South Korea has several exchanges active in trading including bicoin.
After meeting with the Finance Ministry, the Bank of Korea and the National Tax Service, the regulator said: “Raising funds through ICOs seem to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well." He said that there would be stern penalties for financial institutions or others who try to issue ICOs. However, there were no details given as to what the penalties would be. As with the Chinese government, the South Korean regime saw the ICO's as a locus for possible financial scams. The Commission said that it would continue to monitor markets to see if additional regulations are needed.
As the quantity and scale of ICO's increase government regulators in many countries are showing concern. According to Coindesk ICO tracker data, in 2017 alone ICOs have raised $2.3 billion in funds. While some of these may be serious attempts to raise money to launch a coin others may involve quite risky plans that resemble pyramid schemes.
Many ICO's already will not accept US citizens. Only accredited investors are able to take part in private security placements. One could argue that these are not securities. A recent article explains: Once the SEC will effectively intervene in cryptocurrency ICOs – which is only a matter of time – things will get very interesting, to say the least. A lot of previous ICOs didn’t take the necessary steps to “deny” US citizens from investing. All of those projects and their teams are at the mercy of the SEC for the time being. Violating US securities laws is not something anyone wants to deal with. Additionally, these laws can also be enforced upon non-US companies, which makes it even more important to take countermeasures. "SEC" stands for the US Securities and Exchange Commission. The SEC is responsible for enforcing federal securities laws and also proposes new rules. It regulates exchanges and other security activities. Those issuing IOC's are obviously worried about future SEC regulation of IOCs.
As the appended video shows, the price of bitcoin and some other cryptocurrencies dropped after the news from South Korea. This is a setback for bitcoin as it has been recovering from the effects of the Chinese announcement.
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