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On Friday, South Korea’s financial regulator, the Financial Services Commission, has issued a ban on all Initial Coin Offerings.
First China, Now South Korea
Earlier this month, news circulated that the Chinese financial regulator banned all Initial Coin Offerings and forced cryptocurrency exchanges to shut down their operations until the end of September. According to an article by Techcrunch, on Friday, South Korea’s financial regulator banned all Initial Coin Offering, due to concerns of potential financial scams. The South Korean regulator stated following:
Raising funds through ICOs seem to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well,
The South Korean regulator also stated that financial institutions and parties that are involved with Initial Coin Offerings will face “Stern penalties”. The regulator argues that these measures are necessary in order to properly protect investors and users. The governments of the U.S., Hong Kong, and the UK have also issued warnings to investors that are planning to invest in Initial Coin Offerings. The vice chairman of Korea’s Financial Services Commission (FSC), Kim Yong-beom, gave the following statement:
There is a situation where money has been flooded into an unproductive and speculative direction,
Given South Korea enormous cryptocurrency trading volume, the market was negatively affected by this news. The price of Bitcoin sharply fell with 3%, and the price of Ethereum also dropped 6.5%.
Japanese Government Approves Cryptocurrency Exchanges
Japan became popular in the cryptocurrency space after the famous Mt.Gox hack in 2014, where 850,000 Bitcoins were lost. In April 2017, the Japanese government officially recognized the decentralized cryptocurrency as a legal tender. Today, Japan’s Financial Services Agency announced that it granted permissions to 11 different companies to operate as cryptocurrency exchanges. The agency argued that this is a necessary step to further legitimize cryptocurrencies and to protect the consumers from fraud. Currently, there are 17 more companies waiting to receive their permission from FSA in order to operate as cryptocurrency exchanges.
What are your thoughts on South Koreas ban on Initial Coin Offerings? Do you think that it is necessary in order to protect investors? Let us know in the comments below!
Images courtesy of Pixabay, Business Korea