First China, now South Korea has banned ICOs

South Korean Flag

SEOUL -- The South Korean financial watchdog will forbid initial coin offerings, prompted by signs that the fundraising method due to concerns over the potential for financial scams.

“There is a situation where money has been flooded into an unproductive and speculative direction,” FSC vice chairman Kim Yong-beom added, according to national news agency Yonhap.

An ICO is a fundraising tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value.

China’s Central Bank became the first to outlaw virtual token sales, in a move made earlier this month and now Korea is following suit.

Many companies globally have raised approximately $2 billion this year to date via ICOs. But it seems like it has attracted widespread criticism for its potential to deceive investors, who are not required to be accredited in any way because the space is not regulated like mainstream financial markets but there are plenty of more problematic ICOs while the number has risen behind 50 token sales per week

Just last week, a well-known Hong Kong gangster was linked with a $500 million casino ICO in Macau. also if you can remember a parody coin called ‘Useless Ethereum Token’ managed to raise nearly $90,000 from investors earlier in the summer.

“Raising funds through ICOs seem to be on the rise globally, and our assessment is that ICOs are increasing in South Korea as well,” Reuters reports that the Korea’s Financial Services Commission (FSC) as said following a meeting with the Bank of Korea and the National Tax Service.

Regulations imposed in China have also led to Korea representing an increasing portion of global cryptocurrency trading. Today’s news sent the price of bitcoin down three percent and the value of Ethereum is down 6.5 percent.