BUSINESS

Korea to ban digital currency offerings

By Yonhap
  • Published : Sept 29, 2017 - 11:50
  • Updated : Sept 29, 2017 - 11:50
South Korea's financial authorities said Friday they will ban all forms of initial coin offerings, joining a wave of global regulations against the popular fundraising scheme with cryptocurrencies.

The decision came after a meeting of senior officials from relevant ministries, led by the Financial Services Commission, the regulator said in a statement.

Initial coin offerings allow start-ups or individuals to raise funds by offering cryptocurrencies. It has fueled a surge in values of digital currencies this year. 

A collection of bitcoin tokens stand in front of an illustration of binary code in this arranged photograph taken in London on Jan. 4. (Bloomberg)

But, financial authorities around the world have issued warnings against such developments, saying it could lead to an asset bubble and investors are vulnerable to scams or market manipulation.

With risks of scams growing over initial coin offerings, the FSC said it will ban "all forms of initial coin offerings regardless of using a certain technology or a certain name."

Kim Yong-beom, vice chairman of the FSC, said at the meeting that, "There is a situation where money has been flooded into an unproductive and speculative direction."

South Korea is home to one of the world's largest bitcoin exchanges, with about 1 million people estimated to have the best-known digital currency.

Despite a boom in transactions of digital currencies, such exchanges are largely unregulated as they are not recognized as financial products. Also there are no rules protecting people who invest in digital money.

The FSC said it will step up crackdown against any illicit transactions of digital currencies. (Yonhap)