The Financial Services Commission, the South Korean market watchdog, announced today that it is banning all initial coin offerings (ICOs) from the country as well as the trading of cryptocurrency on credit. South Korea thus follows the actions taken by the Chinese regulator, that also recently banned the practice.
According to South Korea’s News1Kim, Yong-Bum, Vice Chairman of the Financial Services Commission, said: “The financial authorities are banning ICOs. The intention is to prevent consumers from damaging the market because they are overheating due to a surge in demand for speculative receivables, triggered by an increase in ICO fraud.”
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The South Korean regulator also warned today that “stern penalties” will be levied on financial institutions and anyone involved in issuing of ICOs.
Ban on credit
The FSC has also banned the practice of cryptocurrency exchanges giving traders credit, which is basically a way to enable leveraged margin trading.
It explained: “Unauthorized credit granting activities under the Financial Industry Act are likely to encourage speculation and increase consumer harm.”
The South Korean cryptocurrency trading market, which has been seeing amazing growth in global market share ever since the Chinese regulator started limiting exchanges in China, was considered to be the next Asian cryptocurrency giant in terms of trading volume. By limiting trading on credit, the FSC could limit South Korea’s influence.