South Korea’s financial regulator banned initial coin offerings (ICOs) today after a meeting of the Financial Services Commission (FSC) in the capital city of Seoul.
In a report online (in Korean) the FSC stated it will prohibit all forms of the ICOs, no matter what kind of technical array or token design is involved. The government has not accepted trading of virtual currencies as part of its financial system, and will continue to monitor markets to see additional regulations are needed. And regulators intend to crackdown on ICOs and hit them with stern penalties.
The Commission’s statement states that ban was made because “market funds are being pushed into a non-productive speculative direction”, also noting that cryptocurrencies are known to have been have been used in several crimes, may be being used as a means of laundering money and that some ICOs may be frauds.
It also points out that ICOs have attracted regulators’ attention in other nations, for the same “quack-like-a-stock, look-like-a-stock” reasons that worry the USA’s SEC.
They also note on a wave of recent arrests of criminals running completly fake ICOs who raised 25 billion KRW ($22 million) from over 1,000 investors. Due to such criminal activity, a new “Virtual Currency Detention Centre” has been created, the release states.
The decision of its Financial Services Commission is likely to have a negative impact on the cryptocurrency markets.