The Financial Services Commission (FSC) of South Korea has released a statement in which they announced that all Initial Coin Offerings (ICOs) will be banned in the country. According to Reuters, South Korea’s FSC said on Friday that “it will ban raising money through all forms of virtual currencies.” The publication conveyed the regulators statement:
"All kinds of initial coin offerings (ICO) will be banned as trading of virtual currencies needs to be tightly controlled and monitored."
The FSC, after meeting with the finance minister, the Bank of Korea, and the National Tax Service, said that the practice of raising funds through ICOs is on the rise globally. Moreover, the use of ICOs in South Korea is also rising. Regarding their decision to ban ICOs, FSC elaborated that "the decision to ban ICOs as a fundraising tool was made as the government sees such issues as increasing the risk of financial scams."
The authority commented that the firms, or any institution, that are still found to be involved in ICOs will be given stern punishments. Korea’s move to ban ICOs comes a week after China’s ban. Chinese authorities clamped down on some of the cryptocurrency exchanges, closing their operations. Other exchanges were given until the end of September to wind up their operations. However, Korea is not extending its ban to cryptocurrency exchanges. Instead, the government will keep observing the cryptocurrency market closely in order to determine whether the market requires further regulations or not, as detailed in the recent announcement by the FSC.
South Korean authorities are stepping up their efforts to regulate the crypto market and a regulatory committee was set up in July to evaluate the required regulations. Park Yong-Jin, a law maker proposed an amendment to the Electronic Financial Transaction Act, in order to provide a regulatory framework for virtual currencies.
South Korean authorities legalized small-scaled bitcoin remittances in July, as a part of the amended Foreign Exchange Transaction Law. This was widely hailed as positive news for the crypto market, with critics seeing this as a step towards the normalization of digital currencies.
The South Korean Ministry of Science and the Korean Communication Commission are deciding how to conduct on-site inspections of bitcoin exchanges. The regulators will focus on the cyber security of the cryptocurrency exchanges and their compliance with the financial and privacy laws of the country.