South Korea will ban all forms of initial coin offering (ICO) due to the risk of scams, the country’s financial watchdog has said.
The Financial Services Commission (FSC), the country’s finance regulator, said all forms of ICO are completely banned, as are credit exposures such as the loaning out of digital currencies.
The FSC said ICO, the popular fundraising scheme with new startups and individuals, had a high risk of asset bubble and that investors were vulnerable to scams and market manipulation.
Businesses using digital currencies that are in the credit exposure will also be banned from signing MOUs or sales to financial institutions.
There have been cases where ICO was used for speculative reasons, FSC said, adding that it will step up their crackdown efforts. The watchdog banned the use of digital currencies in issuance of securities earlier this month.
The FSC did stress that the government was not “institutionalising” the exchange of digital currencies, but will monitor the situation for better regulatory oversight going forward.
South Korea is estimated to have around 1 million people having bitcoin, and there have been calls for regulatory oversight due to the increase in its usage.
South Korea follows the lead of the US, China, Singapore, and other countries that have announced similar regulations.