South Korea is now the next Asian country that has decided to outlaw Initial Coin Offerings (ICOs). This follows from the move by China to do the same earlier this month and raises many questions about what the ban will cover.
We had previously taken a look at how the move by the Chinese might affect the decisions of other countries like South Korea. The head Financial Services Commission (FSC) of South Korea, Mr Kim Yong-Bum announced the ban today in a press release (translated version here).
This comes off of a long deliberation between the FSC, the Fair Trade Commission, the Ministry of Strategy and Finance, the Ministry of Justice and 6 other government bodies. The press release stated that the act of raising funds through the digital tokens was a violation of current capital market law and also warned of “stern penalties” should there be skirting of the rules. He was also quick to point out that this was not an attempt to prohibit business growth. He went on to say that
If it is a normal company with technology, it can raise money through transparent methods such as stock openings and crowdfunding. The ICO prohibition should be viewed in terms of investor protection rather than impeding industrial development.
The head of the Korean Blockchain Industry Association disagreed with the move by the regulator. Mr Kim Jyung-Joo said that blockchain technology could be the basis for some sort of a fourth industrial revolution. He also said that the comments and actions by the regulator were inappropriate. Even more industry insiders such as the co-founder of a South Korean exchange called Korbit thought that the move would indeed curtail investment.
Other Regulation to Come
It seems as if the ICO ban was not the only move which could come against cryptocurrencies. The statement also mentioned that some members of the task force would still monitor the retail trading of the cryptocurrencies such that they could formulate an opinion of whether they should be regulated. The statement also went on by making some of the other general stereotypes associated with cryptocurrencies such as their use in money laundering and the drug trade.
Whether there will be any other Asian countries that will follow in the steps of South Korea remains unknown. The Securities and Futures Commission (SFC) in Hong Kong also released a statement that mentioned if the digital tokens fell under the definition of a “security” then dealing with these digital tokens may be considered a regulated activity.
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