South Korea Will Not Lift ICO Ban, Says Financial Services Commission

South Korea’s Financial Services Commission (FSC) has decided to continue to ban initial coin offerings (ICO) in the country.

The South Korean government formally banned ICOs in September 2017, citing concerns about fraud as a means to ultimately protect investors. In 2018, it was reported that regulators were considering lifting the ban after the National Assembly proposed to allow ICOs under the conditions of investor protection.

However, after the FSC conducted a survey on 22 domestic firms that carried out ICOs from outside the country, it has decided to not lift the ban. According to the regulator, the survey found that most ICOs are following illegal practices to raise money from South Korean investors. The firms reportedly raised around 566.4 billion won ($509M USD) since the second half of 2017.

The survey also found that some of the firms that responded to the FSC had been setting up paper companies in Singapore and Switzerland to evade the ICO ban. In addition, some ICOs did not disclose important information like company profiles and financial statements, and in some cases, the companies even furnished false information to potential investors. The FSC warned that such projects are risky for investors as the market value of the tokens of these ICOs has fallen by an average of 67.7 percent since launch.