South Korea Bans Initial Coin Offerings

South Korea has become the latest country to ban raising money through Initial Coin Offerings (ICOs.) This is in an effort to protect investors from fraud by the use of any forms of virtual currencies. South Korea’s financial watchdog, Financial Services Commission, announced on Friday that the trading of virtual currencies needed to be tightly controlled and therefore, all ICOs will be banned in the country.

In a statement, the commission added the government is not accepting the trading of virtual currencies as a part of its financial system and will step up the crackdown against any illegal trading in cryptocurrency. The government will also continue to monitor markets to see whether any additional regulations are needed. The statement further added that ‘stern penalties‘ would be issued to financial institutions and any parties that are involved in the issuing of ICOs.

South Korea’s digital currency task force has also discussed increasing regulatory oversight as a means to further consumer protection efforts. The task force will look into other concerns like the character of digital currency traders, taxation and permits by studying the regulatory practices in other countries before forming new policies. The authorities will also be recommending digital currency exchanges to include consumer protection measures when providing services.

The price of Bitcoin dropped by 2% since the ban on ICOs was announced while the price of Ethereum declined by 4%. South Korea’s move follows a wave of global regulations against the virtual currency. Earlier this month, China banned all ICOs and called for domestic crypto exchanges to halt all trading services for Chinese customers. Australia has also released their own guidelines for businesses considering raising funds through ICOs while United States’ securities regulators have signaled for greater scrutiny of the digital currency.

Initial coin offerings became a popular mechanism for companies to raise funding using an alternative venture capital model. India’s market regulator SEBI is also reportedly planning a framework to regulate the country’s bitcoin market o ensure that India’s public issue norms are not breached.