South Korea's financial regulator stated it will ban raising money through virtual currencies, a move that follows the similar decision in China on initial coin offerings. What is the purpose of South Korea ICO Ban?
The authority has decided to ban initial coin offerings during its meeting. The meeting of the FSS cryptocurrency task force has taken place on September 29th.
What is the purpose of South Korea ICO Ban?
The purpose of the ban is to protect investors from fraud. Kim Yong-bum, vice chairman of the Financial Services Commission, has reportedly, commented (translated):
“We are worried about adverse effects such as increased risk of fraud; The ICO will be prohibited in all forms.”
Yet, some of the local South Korean reports talk about the different extent of the ban. According to one of the sources, the FSS “prohibits all types of ICOs in Korea.” However, others state that the ban is only valid for the ICOs launched by Korean startups. Moreover, the latter report cited an official who said that the South Korea ICO ban does not extend to individual investors.
One of the reliable sources, Crypto Korean, was the first to bring this news to the attention of the public. Moreover, the source has stated that both claims of the previous reports are coming from respected sources. However, the crypto news agency stated that the disagreement in terms of the ban extent “cause confusion among Korean community.”
Moreover, the local reports state that the South Korea authority will crack down on cryptocurrency exchanges. This would appear in the face of bans on the margin trading and lift the enforcement of anti-money laundering (AML/KYC) regulations.
South Korea ICO Ban and Ethereum price impact forecast
The South Korean ICO ban comes just some weeks following China’s decision to bar this funding approach. Yet, this move by FSS could have much bigger impact on the industry.
Korea is one of the markets that has benefitted by China’s ICO ban. Moreover, country’s most popular messaging app had announced the creation of a new cryptocurrency exchange. Reportedly, it would support more than 100 altcoins.
The potential South Korea ICO Ban could pose a question mark next to the Korea’s role within cryptocurrency ecosystem. In case ban will be applicable only locally, this would appear as a much less disruptive step.
Irrespective of the ban extent, it will most likely put short-term downward pressure on the Ethereum price. As a matter of fact, enormous Ethereum volume is concentrated on Korean exchanges. In case of the ban, it is very likely that the demand will diminish among locals.
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