S Korea financial regulator bans initial coin offerings (ICOs)

South Korea's financial regulator today announced it will ban initial coin offerings (ICOs) - a new funding mechanism based on virtual currencies that allows millions of dollars to be raised in minutes - Reuters and state news agency Yonhap reported.

The Financial Services Commission (FSC) said in a statement that the ban will cover ''all forms of initial coin offerings regardless of using a certain technology or a certain name,'' citing the risks of scams are growing in the sector. The FSC added it will step up crackdowns against any illegal trading in cryptocurrency.

The move comes after the crypto currency attracted global regulations in the wake of the crypto-token frenzy worldwide. Earlier this month, Chinese regulators announced all ICOs would be banned, and later called for domestic crypto exchanges to halt all trading services for Chinese customers.

Australia too released its own guidelines for businesses considering raising funds through ICOs. The US securities regulator called for increased scrutiny of ICOs, but stopped short of suggesting a wider crackdown.

According to the FSC, ICO, the popular fundraising scheme with new startups and individuals, ran a high risk of asset bubble which left investors vulnerable to scams and market manipulation.

There have been cases where ICO was being used for speculative reasons, FSC said. It added that it will step up their crackdown efforts. The FSC banned the use of digital currencies for issuance of securities earlier this month.

The FSC stressed that the government was not "institutionalising" the exchange of digital currencies, but the situation would be monitored for better regulatory oversight going forward.

According to estimates, around 1 million South Korean citizens own bitcoins, and there have been demands for regulatory oversight as usage of the crypto currency increases.