May 11, 2024
Finance
Korea bans all types of initial coin offerings
[THE INVESTOR] Korea’s financial regulator announced on Sept. 29 a complete ban on all types of initial coin offerings, an increasingly popular but unregulated means of crowdfunding via use of cryptocurrency, often a source of capital for startups.
The Financial Services Commission said in a statement that all forms of ICOs will be restricted regardless of type or technology, as risks of scams are growing.
Around US$2 billion has been raised through ICOs this year, according to analysts at Autonomous Research.
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Kim Yong-beom, vice chairman of the Financial Services Commission, talks during a meeting on cryptocurrencies on Sept. 29 in Seoul. (Photo: FSC) |
“There have been situations where money was routed to unproductive and speculative directions (involving ICOs),” Kim Yong-beom, vice chairman of the FSC, said at a meeting with senior officials on Sept. 29.
The decision follows other financial regulators around the world that have grown cautious about the rapid development of unregulated digital currencies. The strongest regulatory measures were taken by China, which earlier this month ordered a blanket ban on all forms of ICOs. The country also ordered the shut down of all virtual currency exchanges.
Korea and China are two of the fastest growing markets for cryptocurrencies. Korea has become the top 3 cryptocurrency market worldwide in terms of transactions, according to Bithum, Korea’s biggest digital currency exchange and also the world’s largest platform.
Amid a boom in transactions, the government warned earlier this month that it would ramp up monitoring of digital currencies. However, cryptocurrency advocates said the restrictions like the entire ban of ICOs would hinder development of the new industry.
Vitalik Buterin, co-creator and flag bearer of Ethereum, who visited Seoul earlier this week, said that “banning ICOs will definitely hamper technological development,” and warned that regulations could be counterproductive at this stage of development.
By Park Ga-young (gypark@heraldcorp.com)
