Just a month after the venture capital early stage startup funding has been overtaken by the volumes of the Initial Coin Offerings, a clear government take has been felt all over the world, and especially in Asia. Followed by the Chinese idea of banning investments in the ICOs, South Korea has recently announced that it is about to ban ICO investments too.

Currently, the Financial Services Commission, a regulator of trading and investment activities in South Korea, has declared that the spite the fact that so many services like try to provide realistic ICO assessments, there is still a huge potential for the scams. Hence, the action the FSC has taken is very severe – it has prohibited all of the South Koreans to be  connected in any way with the Initial Coin Offerings. Yes, you got it right, if you are from South Korea, you are neither able to flip an ICO, nor you are allowed to invest into one. The FSC has stated that any party that disobeys this rule will be punished, yet the possible punishment has not been defined.

Similar practice has also happened in the United States where Securities and Exchange Commission (SEC) has not banned the ICOs, but has started to take severe actions against the companies that might be abusing the system. Just last week, SEC has pressed charges against an entrepreneur of a Russian origin who is believed to operate two scam ICOs in the real estate and diamond sectors.

While raising capital via ICOs can certainly seem attractive for the companies, it is also very attractive for the investors. The companies are simply able to start raising funds without spending a fortune on the legal advisors and consultants. Besides that, they can enjoy a flexibility of the conditions. As for the investors, typically putting money into an early stage venture was restricted to very wealthy individuals and the investment companies. However, with the help of an ICO, it is now possible for a regular investor to put a share of its equity into an early stage company.

Yet many countries see the increasing volumes of such investments and their potential threats. Many of us will agree that prohibition is not a proper way to solve the current situation as ICOs are not necessarily bad, they are only bad if the intentions of the companies that raise funds are not good. Still, considering the potential risks, some countries decide to fully prohibit ICOs instead of thinking of a proper way to regulate such types of investments.

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