The country’s financial regulator, South Korean Financial Services Commission (FSC), announced today that ICO crowdfunding is now illegal and “stern penalties” will be applied to any institution or party involved in creating an ICO.
The decision was a resulted of a meeting held today by the Seoul cryptocurrency task force. Created in July, the taskforce initial purpose was to determine if bitcoin needed regulation but it seems they turned their attention to the exponential growing crypto token market. Considering ICOs as a “violation of the capital market law,” the ban was justified as a way to prevent financial frauds that are sometimes associated with ICOs.
The FSC also declared that margin trading is now banned from cryptocurrency exchanges and anti-money laundering (AML/KYC) regulations will be reinforced. On-site inspections of cryptocurrency service providers, like cryptocurrency exchanges, will be conducted according to the Korea Communications Commission and the South Korean Ministry of Science.
“All kinds of initial coin offerings (ICO) will be banned as trading of virtual currencies needs to be tightly controlled and monitored.” – South Korean Financial Services Commission
Governments and ICO
The crypto 2.0 space is getting a lot of attention from world governments and financial regulatory entities. The US Securities and Exchange Commission (SEC) and the Canada Securities Administrators (CSA) stated in August their intentions to regulate ICO tokens as securities. This lead many ICO projects to stop accepting investors from the US, but it wasn’t all bad. It seems Canada legislation was sincere in its intention of facilitating and integrating decentralized ledger technologies in a regulated form, and the way was paved for the first legally regulated ICO in Canada, impak Coin (MPK). Shortly after those events the People’s Bank of China (PBOC) announced that participation in ICOs was now deemed illegal. Being the biggest crypto market of the world, the closing down of China’s crypto token market send rippling effect felt throughout the crypto community and market prices.
South Korea and Cryptocurrencies
Cryptocurrencies are very used and popular in South Korea. Hosting the world’s largest Ether market, South Korean Bithumb is one of the top five Bitcoin and cryptocurrency exchanges in the world. It looked obvious that South Korea was one of the markets that had most to gain from the void left by China’s ICO ban, but it seems it wasn’t destined. Let’s hope that South Korean regulators can follow the good examples left behind by Canada, providing flexible legislation and support in regulating ICOs, and Japan, where bitcoin is considered a legal payment method and crypto exchanges are permitted to operate only under safe regulations for the clients.