China announced in early September that it would ban all Initial Coin Offerings (ICOs) and shut down domestic Bitcoin Exchanges in the country. The value of the Bitcoin cryptocurrency has skyrocketed this year reaching $5,000 and is currently valued at $4,110. When China announced that it was banning ICOs and Bitcoin exchanges, the value of the cryptocurrency dropped significantly before stabilizing after a few days.
China decided to ban the popular cryptocurrency because local investors were buying heavily into Bitcoin and were betting against the yuan – which is the local currency. The Chinese government has been trying very hard to stabilize the yuan and banning Bitcoins was another way of arresting its fluctuation.
South Korea announced this week that it was following in the footsteps of China and would ban ICOs. There has been a marked increase in the number of startups offering ICOs which is a process of awarding shareholders with digital tokens. The popularity of Bitcoins and its significant growth rate in the last 24 months has caused thousands of investors from across the world to buy into these ICOs.
China and South Korea remain concerned over the cryptocurrency industry and such ICOs because there are a number of companies who are launching ICOs and bringing in millions in investment even though their business plans are sketchy and sometimes even fraudulent. The two governments were concerned that thousands of bitcoin investors could get scammed eventually by fraudulent companies who run fake ICOs.
South Korea has confirmed that any companies engaging in ICOs going forward will be hit with heavy penalties. The government has also stated that the cryptocurrency industry needed to be better regulated and closely monitored going forward. Bitcoin prices dropped by 2 percent after South Korea confirmed that it would be banning ICOs.
Taiwan has now expressed caution over the Bitcoin industry after seeing China and South Korea ban ICO’s. The country’s legislators have called for ICO laws to be fast tracked in order to have a regulated cryptocurrency industry and prevent fraudulent exchanges from taking place. Jason Hsu, who is a legislator with the Kuomintang opposition party has been one of the key leaders looking to promote the fintech industry in the country. He has called on Taiwan’s legislators to roll out new ICO laws to address concerns over Bitcoins and ICO’s.
In a statement, Hsu said
I am worried that with both China and South Korea banning ICOs, all this hot money will flow into Taiwan’s stock market and real-estate