The move mirrors similar announcements made by the U.S. and China where increased trading volumes of cryptocurrencies have sparked concerns.
On Friday, South Korea’s financial regulator has stated it will ban the raising of funds through all forms of virtual currencies, including Initial Coin Offering, (ICO), in a move that mirrors China’s restriction on initial coin offerings.
As per South Korea’s Financial Services Commission, all kinds of initial coin offerings (ICO) will be banned as trading of virtual currencies needs to be tightly controlled and monitored.
“Raising funds through ICOs seem to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well,” said the regulator in a statement after a meeting with the finance ministry, the Bank of Korea and the National Tax Service.
It went on to add, “Stern penalties” will be issued on financial institutions and any parties involved in issuing of ICOs. It did not elaborate on what those penalties might be.
This decision to ban ICOs as a fundraising tool underscores growing suspicion by the government that it raises the risks of financial scams.
Friday’s announcement by South Korea’s Financial Services Commission does not in any way mean that the South Korean government has implicitly accepted trading of virtual currencies as part of its financial system.