The initial placement of the tokens became popular in the world as IPO alternative mechanism of raising funds
The financial services Commission of South Korea on Friday announced a ban of all IPOs in tokens (initial coin offering ICO) in the country, writes CNBC.
In addition, South Korean regulator financial industry has stated the need for strict control of trading operations with cryptocurrencies.
The Commission is cautious of overheating and frauds that may be linked to the ICO, says Bloomberg.
The ICO have recently become popular around the world as an alternative mechanism to raise funds. Rapid development of the industry, poor understanding of how it works, and the lack of regulation is of concern in many countries.
The initial placement of tokens is a release of any virtual company securities or currencies that are already being sold for real money. ICO is the primary means of attracting investment in the project. This form of raising funds was created by analogy with the primary placement of shares on the stock exchange initial public offering (IPO), but it has its own peculiarities.
So, unlike stock buyers, buyers of tokens does not get any right of ownership. In addition, tokens are sold usually in secure environments bloccano. It implies the anonymity of the buyers, which is against the rules of the IPO. It is also noteworthy that despite the fact that the tokens are in fact the analogue of the bonds, their customers do not yet have legislative protection in case the Issuer does not fulfill debt obligations which he took upon himself the sale.
Earlier in September, the people’s Bank of China (PBOC, the Central Bank of the country) completely banned ICO, recognizing this process is illegal. Regulators in the U.S., Hong Kong and the UK took the time to study this phenomenon and its potential impact on markets and the economy.
The Commission on securities and investment Australia on Thursday released new guidelines for issuers ICO and warned consumers that they should understand the potential risks associated with such placements, and to fear of fraud.
In August it was reported that Singapore was going to equate the initial placement of tokens to sell securities.