In a fresh blow for cryptocurrency, South Korea’s financial regulator Financial Services Commission (FSC) on Friday announced that it will ban raising capital through all forms of virtual currencies. The regulator cited ‘potential for financial scams’ as main reason for imposing the ban. The decision comes closely on the heels of similar restrictions imposed by China on ICOs ((Initial coin offerings) last month.
According to a South Korean news agency, FSC vice chairman Kim Yong-beom claimed that money raised through ICOs seem to have flooded into an unproductive and speculative direction.
However, China & South Korea are not the only countries to lead the crusade against cryptocurrency. Regulators from important countries including U.S, Hong Kong, Singapore & India have warned investors & companies against investing in ICOs or virtual currencies.
The crust of the entire matter is that unlike conventional financial markets, ICO market is not regulated by any regulator or government body. This fact invariably brings the entire ICO market under the shadow of suspicion, presuming that the marketplace is dominated by shadowy investors & scamsters.
Although the adverse impact of ongoing crusade against cryptocurrency is yet to be ascertained, but there is little doubt that global startup ecosystem is on the receiving end of this crusade. Startups, which are always in the dire need of capital, have become increasingly dependent on ICO market to meet their capital needs. This year so far startups from across the world have reportedly raised $1.8 billion through ICO market.
The global rush to put a curb on ICOs clearly reflects how much cryptocurrency or virtual currencies have come of an age during the last few years. Touted as the future of currency, millions of investors including global celebrities have recently rushed to invest in virtual currencies like Biticoin & Ethereum. However, the ongoing crusade seems to have left the fate of virtual currencies hanging in balance.