Cryptocurrency Speculators Watch Nervously as South Korea Bans ICOs

in #steem7 years ago

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The cryptocurrency market is having anotherrocky morning as South Korean authoritiesannounced a ban on initial coin offerings (ICOs). While countries like the US and the UK have warned investors to exercise caution before becoming involved with such projects, China has completely banned the fundraising method, andTaiwan could be next.

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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 ...

“Stern penalties” will be issued on financial institutions and any parties involved in issuing of ICOs, the statement added, without elaborating further on the details of those penalties.

ICOs have become a hot new way for startups to raise money by offering new digital tokens in the cryptocurrency space, and according to Forbes, the method has pulled in over $2 billion in the first nine months of 2017. They’ve also been shown to be vulnerable to hackers looting fundsand scammers taking advantage of overzealous investors.

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For governments that take an active role in micro-managing their economies, like China, the ICO has become too risky to permit. But at the same time, these countries haven’t attempted to completely ban the use of cryptocurrencies. South Korea’sannouncement on Friday made it clear that the country’s current tolerance of digital currencies should not be read as implicit acceptance. But it’s unclear how a country would regulate decentralized currencies like bitcoin even if they wanted to.

So far, cryptocurrency prices have dropped following market-shaking events like the hard fork into two currencies that split bitcoin this summer and China’s increased regulations. But values have always leveled back out. One reason could be that people really believe there’s a future in this market, but more likely, the stabilizations are just the result of speculators jumping in and out. “I sold at $5,000 or $4,980,” Mike Novogratz, a former Wall Street tycoon that’s focused on bitcoin at the moment, tellsBloomberg. “Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.”

At the same time, established financial firms likeFidelity are getting into the market, and companies like Overstock.com are offering their own digital tokens. Still, for every offering that’s coming from a responsibly-managed company, there’s a flash in the pan, get-rich-quick scheme that doesn’t have much going for it beyond acelebrity endorsement. Just know ahead of time, if you invest in an ICO just because DJ Khaledpromoted it on Instagram, you played yourself.

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