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South Korea Bans Virtual Currency

by Nafeesa / Oct 01, 2017 10:55 AM EDT
South Korea Bans Virtual Currency

South Korea on Friday banned raising money through all forms for virtual currencies, after a similar restriction in China. The Financial Services Commission said all kinds of initial coin offerings (ICO) will be banned as trading of virtual currencies needs to be tightly controlled and monitored.

According to Cryptocoinnews.com, the official statement by JoongAng cites Kim Yong-bum, vice chairman of the Financial Services Commission said, "We are worried about adverse effects such as increased risk of fraud, and the ICO will be prohibited in all forms."

The Korean ICO ban-which comes just weeks after China issued a blanket ban on this nascent funding model-could have far-reaching implications, the degree of which will correlate to the extent of the prohibition. Korea was seen as one of the markets most likely to benefit from the void created by China's ICO ban.

It is also rumored that the ban is the counter step to the alleged cyber attacks on cryptocurrency exchanges by hackers from North Africa. Media reported that the Cybersecurity firm FireEye has said it had traced three attacks on cryptocurrency exchanges in Seoul back to the rogue state this year.

The attacks on South Korea's cryptocurrency took place between May and July last year, and one was successful. With North Korea being hit with more and more UN sanctions due to its frequent missile and nuclear bomb tests, the country is becoming increasingly cash-strapped.

Some even believe that a company found evidence Pyongyang was using its coal supplies - banned from being exported due to economic sanctions - to power so-called "bitcoin mines". Bitcoin mines are generally large server farms containing thousands of machines specifically designed to mine the cryptocurrency.

The ban will likely put short-term downward pressure. That said, the markets have already demonstrated their ability to weather the Chinese ban on ICOs and bitcoin exchanges.

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