Regulator Wary of ICO Bubble

Emilio Banks
September 30, 2017

"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", Reuters reports. The decision tracks similar announcements in the US and China where increasing trading volumes of cryptocurrencies are sparking concerns.

This new move by countries to tighten regulations pertaining to cryptocurrencies, or to ban them altogether, seems to be in line with the theory that they intend to replace them with digital reserve currencies of their own.

But the lack of oversight has attracted criminals, with some estimates showing about 10% of all ICO funds being stolen by thieves.

According to Bloomberg, digital currencies like bitcoin and ether experienced a small drop in price following the ban - 5.7 percent for ether and 3.5 percent for bitcoin - but both have already recovered.

The "tokens" that they sold were not traded on the market. The harsher rules have reportedly not stopped traders from buying and selling cryptocurrencies like Bitcoin.

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The government plans to investigate any violations and deal with them strictly even before its measures are legislated, it said in the statement.

South Korea's regulator announced that a ban might be imminent in early September, warning that it would "strengthen levels of punishment" for "illegal fund-raising".

Meanwhile NXC, the owner of gaming company Nexon, recently purchased a majority stake in Korean cryptocurrency exchange Korbit in an Dollars 80 million deal.

Its national police agency said this week it confirmed North Korean hackers tried unsuccessfully to hack four bitcoin exchanges using emails containing malicious codes between July and August.

Swiss financial watchdog FINMA has begun investigating a number of initial coin offerings (ICOs) for possible breaches of Swiss law, spelling greater regulatory oversight of some of the most prominent blockchain projects in "Crypto Valley". The governments of the U.S., Hong Kong, and the United Kingdom have also issued warnings to investors that are planning to invest in Initial Coin Offerings.

Other reports by TheSundaySentinel

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