Why South Korea banned Initial Coin Offerings?
After China, the South Korean financial authorities have also banned Initial Coin Offerings. Before knowing the reason, it is important to know what actually is ICO(Initial Coin Offerings).
Companies, in order to raise funds for their new business, offer their shares to the public at a price. This way, they acquire huge capital from the public. To date, companies like Alibaba Group, Facebook, VISA raised large sums of money this way. It helps companies getting a big start. This is known as Initial Public Offerings (IPO). When the same process is done by any Cryptocurrency, then it is called Initial Coin Offerings (ICO).
The reason why South Korea banned ICO is that they suspect cryptocurrencies to be sort of pyramid schemes, and thus they want to strictly control them. According to them, the cryptocurrencies are nothing more than a non-productive and a speculative product.
This step by South Korean Financial Authorities lowered the prices of Bitcoin and Ethereum by three percent, which have recovered by the time this post is published.
Good analysis, nevertheless I believe is more than just them thinking companies/cryptocurrencies might have a pyramid scheme. I think it is also to regulate how we invest and in what kind of markets we do. In order to invest in an IPO there is some heavy paperwork behind it from both parts, the investor and the company.
Surely, because they are watching where financial markets are going towards. As more and more people are getting interested in crypto, the trend of trading stocks has definitely reduced. What do you think can governments really influence the cryptocurrencies?
I mean of course they can and they are already doing it. They are feeling threatened by these types of curriencies they don't fully understand or control. On the other hand safe heavens are coming up like Japan.
Right.
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