South Korea said today that it plans to ban raising money through initial coin offerings (ICOs) for all cryptocurrencies, according to Reuters. The country’s Financial Services Commission said that all ICOs need to be banned because the trading of Bitcoin and other cryptocoins needs to be tightly controlled. Violators of the new ban will receive “stern penalties,” but no details of what those penalties will be have been provided.
As ICOs increase in quantity and scale, they’ve attracted the attention of government regulators in various countries. This year alone, ICOs have raised nearly $2.3 billion in funds so far, according to Coindesk ICO tracker data. China banned ICOs earlier this month, saying that they disrupted the country’s financial order.
The ban comes after South Korea noticed that “raising funds through ICOs seem to be on the rise globally” and domestically, the Financial Services Commission said in a statement after meeting with the national bank, tax, and finance officials, according to Reuters. After all, ICOs can range from serious attempts to build more digital currencies to more risky plans that resemble pyramid schemes, according to some financial experts’ analysis in the past. In addition to banning raising money through ICOs, Korean regulators may exact more measures to control cryptocurrencies after continuing to monitor the situation.